Negative word-of-mouth and potential customer churn in high-involvement services

This study examines how existing customers’ negative word-of-mouth is associated with potential customer churn and the re-spreading of negative word-of-mouth within high-involvement service contexts, adopting a service systems perspective. Through quantitative analysis of 308 interior decoration potential customer data using Structural Equation Modeling, we found that both perceived poor project performance and perceived unsatisfactory service performance significantly predict potential customer churn and the re-spreading of negative word-of-mouth. Results also reveal that perceived poor project performance has a stronger impact on the re-spreading of negative word-of-mouth than on potential customer churn, while perceived unsatisfactory service performance’s influence on potential customer churn slightly outweighs its effect on the re-spreading of negative word-of-mouth. Furthermore, demographic factors, such as gender and education level, play a moderating role in these relationships. This research enriches the literature on potential customer churn, modifies the Two-Step Flow of Communication theory, and elucidates negative word-of-mouth’s critical role as a feedback mechanism in service ecosystems.