Designing an emotional strategy: Strengthening digital channel engagements

The emergence of new technologies has revolutionized the way companies interact and build relationships with customers. The channel–customer relationship has traditionally been managed via a push approach in communication (“What can we sell customers?”) with the hope of cultivating customer loyalty. However, emotional understandings of customers and how they feel about a product, service, or business can drastically alter consumers’ engagement, behavior, and purchasing preferences. This rapidly evolving landscape has left managers at a loss, and what they are experiencing is likely the beginning of a tectonic shift in the way digital channels are designed, monitored, and managed. In this article, digital channel relationships are examined, and useful concepts for clarifying and refining the emotional meaning behind company strategy and their relationship to corresponding digital channels are detailed. Using three case study examples, we discuss the process and impact of such emotionally aware digital channel designs. Recommendations are made regarding how companies can select, design, and maintain digital engagements based on their strategy and industry needs.     

The role of customer gratitude in making relationship marketing investments successful

This paper recognises that customer loyalty is important for many competitive organisations, and that retail firms make investments to build and maintain loyal relationships with their existing and potential customers (e.g. loyalty programs). However, there has been little focus on the mechanisms by which these relationship investments operate to achieve customer loyalty. This paper examines one mechanism, namely customer gratitude, which works to make a firm’s relationship marketing investment a success or a failure. Using data from 1600 undergraduate students, this study empirically confirms the mediating role of customer gratitude between the customers’ perceptions a firm’s relationship marketing investments and customers’ perceptions of the value of the relationship with the firm. Further, a significant moderating effect of perceived benevolence on the relationship between customers’ perceptions a firm’s relationship marketing investments and customer gratitude was identified. For theorists, this customer gratitude model offers a better psychological explanation of how relationship marketing investments operate to improve the value that customers place on their relationships with retailers. Our research suggests that managers should invest resources to stimulate customer gratitude in order to build strong customer–seller relationships.     

Once more, with feeling: Empathy and technology in customer care

Information technology is reshaping relationships between companies and customers, often bringing benefits to both. The unfettered use of technology, however, can erode customer care. For a company to care for customers, its managers and front-line employees must listen empathetically to what they have to say. But a rash of ‘innovations’ aimed primarily at reducing costs has made many companies opaque to their customers, who are—as a consequence—inadequately served and increasingly frustrated. Equally damaging is the resulting estrangement of employees from customers, a separation that dampens the empathy upon which true care for customers depends. As a number of innovative companies have shown, though, technology need not necessarily sour relations between businesses and those they serve. Indeed, technology can actually enrich them if senior managers (1) affirm their commitment to active, empathetic involvement with customers; (2) understand the ways in which current procedures and systems mediate interactions with customers; and (3) promote the deployment of social networks and other technologies to help customers tell their stories, and to enable workers and managers alike to hear them. Only when employees can step into their customers’ shoes can companies add authenticity to the claim: “We care for you.”     

Managing your most loyal customer relationships

Conventional wisdom regarding customer relationships suggests that a company should strive to deepen the loyalty of its customer base. While multiple approaches have been suggested, each approach advocates moving a subset of the customer base from one level of affinity (e.g., neither satisfied nor dissatisfied) to a higher one (e.g., satisfied). While seemingly appropriate, this approach assumes that moving customers up to higher categories is important and should be the focus of a firm’s efforts. Instead, we recommend an approach that involves focusing a firm’s resources disproportionately on its most satisfied customers. This approach provides two major benefits relative to conventional approaches. First, it focuses a firm’s resources on a narrow segment of customers. Hence, it requires significantly less financial outlay and associated financial risk than any approach that is aimed at all or even a majority of customers. Second, as we demonstrate, the financial benefit from leveraging high satisfaction levels among a subset of the current customer base significantly exceeds the financial benefit of other strategies (e.g., moving customers up from neutral to satisfied). We present the results from two case studies that illustrate our main points and provide useful examples of how to leverage a firm’s highly satisfied customers.     

From customer experience to human experience: Uses of systematized and non-systematized knowledge

The conceptual framework proposed herein reveals how firms might establish a human experience focus, using both systematized and non-systematized knowledge to identify points of pain and gain. Such efforts align with the critical need for firms to develop their approaches to the customer experience, by moving beyond addressing how customers respond to their offerings and toward thinking about the human experience of how firms respond to customers’ ambitions, beliefs, values, and feelings to interact in the manner customers prefer. To create a human experience, firms must manage it in relation to touchpoints, personalization, operations, and company culture, using systematized knowledge to monitor the experience, identify problems, and make improvements, together with non-systematized knowledge to innovate in relation to the experience.     

Choosing the Right Metrics to Maximize Profitability and Shareholder Value

There is an ever-present need for managers to justify marketing expenditures to the firm. This can only be done when we can establish a direct link between marketing metrics and future customer value and firm performance. In this article, we assess the marketing literature with regard to marketing metrics. Subsequently, we develop a framework that identifies key metrics that firms should focus on that can give a firm a better picture of how they got to where they are now and insights towards how they can continue to grow into the future. We then identify several organizational challenges that need to be addressed in order for firms to build the capabilities of collecting the right data, measuring the right metrics, and linking those metrics to customer value and firm performance. Finally, we offer guidelines for future research with regard to marketing metrics to help firms establish successful marketing strategies, measure marketing effectiveness, and justify marketing expenditures to top management.     

The influence of service orientation and interaction orientation on consumer identification

A service orientation aims to provide professional and comprehensive service items to consumers in a sale or a non-sale situation, while an interaction orientation has the goal of creating good interaction ability with individual customers in order to maintain long-term, profitable customer relationships, and in the process obtaining valuable information about individual customers. These orientations build customer-centric operations and develop competitive advantages, thus enhancing firm performance and customer value. The main purpose of this study was to examine the relative and collective contributions of different strategic orientations on a firm's performance, with a focus on consumer–company identification. The structural equation model results indicate that (1) both service orientation and interaction orientation positively influence consumer–company identification and (2) interaction orientation results in higher perceived consumer identification.     

The friend or foe fallacy: Why your best customers may not need your friendship

Organizational transactions are handled along a continuum of the firm’s customer relationships, ranging from relational and friendly to more adversarial and us-versus-them in demeanor. For top customers, the approach is almost always close and relational. In this article, we question this view and suggest that it is beneficial to condition the firm’s relationship development efforts on an understanding of the true value to be gained from partnering and increased closeness. We provide a framework with which managers can diagnose their current portfolio of relationships with key customers or suppliers and offer suggestions for action. We provide an empirical illustration of the typical distribution of responses among five regions of the framework and discuss its implications.     

The impact of customer-specific marketing expenses on customer retention and customer profitability

We study the effects of customer-specific marketing expenses on customer retention and customer profitability in a business-to-business setting. Using data from a company providing hygiene services, we look at the impact of a hitherto unstudied type of expense targeted at individual customer relationships: the offering of free equipment to customers. The data allow tracking the activities performed in more than 4,500 customer relationships over a period of 4 years. Retention rates are higher for customers targeted with free equipment, but this effect results from an interaction with customer size. First-order dynamic panel data analyses show that the impact of targeted marketing expenses on customer dollar profit is positive for large customers, but there is no effect for smaller customers. Thus, targeted marketing expenses seem to be a tool for relationship maintenance rather than customer development: they help in retaining large customers that generate more profit, but they do not seem to work in developing new customers into larger, more profitable ones.     

Enhancing Customer Engagement Through Consciousness

Firms and academics recognize the importance of creating an engaged customer base, though an in-depth understanding of how to achieve it is limited. This article proposes that firms that use consciousness as a foundational philosophy can create a more engaging and meaningful customer experience. A retailer or service provider with foundations in consciousness has a higher purpose and values that get espoused and fulfilled throughout the organization, working in a way to optimize benefits to its multiple stakeholders (investors, employees, customers, suppliers, the environment, the community). Building on these foundations, retailers can achieve deeper engagement with customers, deliver outstanding customer experiences, create emotional connections with customers, and establish a shared identity based on a clear purpose and values.     

The benefits and implementation of performance transparency: The why and how of letting your customers ‘see through’ your business

While some organizations swear by the benefits of transparency and are eager to learn and implement transparency practices, many managers are still reluctant or even afraid to use them. Our research reveals that only a few innovative companies have taken steps to leverage a potentially useful form of transparency: the provision of accessible and objective information to customers (e.g., sharing unbiased benchmark data, publishing unfiltered customer comments, or providing candid product reviews that may praise but also criticize the company’s products). Our study also shows that many companies remain wary and view greater calls for transparency as a challenge to be managed rather than an opportunity to be traded upon. This is partly due to limited research into the performance benefits of giving customers access to objective information, and lack of practical guidelines on how to actually implement it. This article addresses these shortcomings. First, we investigate whether performance transparency leads to customer outcomes that can be profitable for an organization and, second, we analyze the characteristics of successful transparency initiatives in a wide range of industries. Our research shows that customers exhibit more trust and are willing to pay a premium to deal with transparent businesses. Also, it uncovers seven effective strategies to leverage transparency. This article provides convincing empirical evidence for the benefits of performance transparency and the ways in which management may implement it successfully.     

What makes the corporate social responsibility impact on Customer–Company identification stronger? A meta-analysis

Customer–company identification (CCI) has been highlighted as an important mechanism that explains the relationship between corporate social responsibility (CSR) and customer outcomes such as customer loyalty and word-of-mouth (WOM). However, findings on when and how this mechanism works are mixed. To uncover the viability and strength of CSR’s indirect effect on customer outcomes through CCI, we conduct a meta-analysis testing a moderated mediated framework. This analysis incorporates 237 independent effect sizes from 58,766 individuals and 86 papers to examine the indirect effect of CSR on customer loyalty and WOM through CCI, while simultaneously testing a range of substantive and control moderators. The results reveal that 1) CSR has a main effect on CCI, 2) CCI mediates the effect of CSR on customer loyalty and WOM, and 3) there are significant theoretical moderators that amplify and reduce CSR’s relationship with CCI. The paper’s year of publication and industry controversy (versus non-controversy) mitigate the relationship between CSR and CCI, while collectivism and a holistic focus augment it.     

Managing Complaints to Improve Customer Profitability

In this study, the authors aim to understand whether, to what extent, and under what circumstances, organizational responses to customer complaints improve customer profitability. To do so, they build upon the congruence approach and propose a contingency framework in which the effectiveness of three organizational responses to customer complaints (timeliness, compensation and communications) in improving customer profitability is contingent upon the strength of the relationship and the type of failure. The framework is tested empirically in the financial services industry applying latent class techniques to longitudinal data for a sample of complaining customers. The results reveal that: (1) different complaint-handling initiatives affect customer profitability differently for each of the four segments of complaining customers that are obtained; (2) these heterogeneous responses to complaint handling are explained by differences in the orientation of the relationship and in the failure context; and (3) complaint-handling initiatives are more (less) effective at improving customer profitability when the benefits they offer strongly (poorly) match the benefits sought by customers in each segment to recover from the failure. These results contribute to a better theoretical understanding of customers’ heterogeneous responses to complaint handling and offer managerial recommendations to allocate marketing resources across alternative complaint-handling strategies to improve profitability.     

From perceptions to propositions: Profiling customer value across retail contexts

The core claim made in the paper is that retailers wishing to identify and manage competitive customer value propositions succeed by measuring and modeling customer value perceptions with reference to specific contexts relevant for their competitive advantage. Hence, the purpose of the paper is to present development and validation of a scale for measuring and modeling customer value and to illustrate how contextual perspective contributes to the evaluation of customer value propositions. The findings, based on empirical data from Finland, Japan, and the U.S., validate a framework wherein customer value reflects economic, functional, emotional, and symbolic dimensions of value, associating with satisfaction and word of mouth effects. The customer value profiles generated on this basis provide analytical insight for evaluating how country, channel, product category, and competitive situation influence the criteria for contextual evaluation of customer value propositions.     

The role of customer contact employees as external customers: A conceptual framework for marketing strategy and future research

Existing streams of literature in marketing, management, and organizational behavior are integrated to propose a conceptual framework that highlights the customer contact employee's dual role as employee and external customer of the organization. Several iterative “cycles of success” are proposed whereby job satisfaction, the employee's patronage of the company's products (i.e., goods or services), and job performance (as customer contact employees) are all enhanced, ultimately leading to long-term relationships (with customers and employees) and profits for the organization. The framework highlights the role of internal marketing as a tool for enhancing the competitive advantage gained by strategically considering the customer contact employee's role as external customer.     

Salesperson CLV orientation's effect on performance

Previous studies show how strategies based on the customer lifetime value (CLV) can lead to an increase of profitability for a firm. In this context, marketing serves the purpose of maximizing CLV and customer equity (the CLV of current and future customers). For most types of service firms, salespeople are direct participants in implementing the CLV concept. However, prior research does not answer the question of whether or how salesperson CLV orientation can enhance profits. Using data on salespeople in a large Chilean retail bank, this study shows that the effect of salesperson CLV orientation on salesperson performance follows an S-shaped function (which is first convex and then concave). Additionally, data does not support the idea that the optimum level of CLV orientation depends on salesperson customer orientation, salesperson adaptive selling behavior, or salesperson experience (i.e., CLV-oriented behaviors could be effective across a wide range of salespeople). As such, this study addresses an important concern among researchers and managers that is related to how to increase the salesperson performance. The findings of this study suggest that firms need to monitor individual salesperson CLV orientation more closely.     

Customers who misbehave: Identifying restaurant guests “acting out” via asymmetric case models

This study uncovers the impact of combined dark triad personality traits, firm's power, and customer demographic characteristics. It uses a sample of 263 restaurant customers. The findings include customer configurations indicating misbehavior and non-misbehavior cases. From a theoretical perspective, the study questions the philosophy of customer sovereignty and applies asymmetric case-based modeling to identify configurations indicating misbehavior customers and non-misbehavior customers. Strategy implications: from a managerial perspective and to tackle misbehavior, firms should use coercive power (e.g., suing customers who misbehave), reward power (e.g., recognition and flattery when customers behave properly), and referent power (e.g., enforcing customers' affective attachment).     

Integration of standardization and customization: Impact on service quality,customer satisfaction,and loyalty

The basic objective of this study is to analyse the direct and indirect impacts of standardization and customization on customer satisfaction and loyalty through service quality. The service quality has two dimensions: technical quality and functional quality. A framework is developed by extending Grӧnroos’ model of service quality by including the antecedents of service quality. A questionnaire-based survey collected data from 315 customers of three service industries: healthcare, hospitality, and education. The data was analysed and the model validated using PLS-SEM. The findings show that: (1) integration of standardization and customization of service offerings is critical for improved service quality; (2) standardization has higher impact on service quality when compared to customization; (3) functional quality has higher impact on customer satisfaction when compared to technical quality; and (4) customer satisfaction has a significant effect on customer loyalty. The contribution of this study is the development of an integrated framework to analyse the roles of standardization and customization on service quality.     

Between a rock and a hard place: Seizing the opportunity of demanding customers by means of frontline service behaviors

Service businesses are increasingly facing more demanding customers as a result of a shift in power from the service providers' side to the customers' side. Related literature predominantly examines the negative side of this ongoing trend, while overlooking the positive side. The major aim of this paper is to examine how frontline employees — investment account managers — deal with the ongoing increase in customer demandingness. To address this, we draw on adaptability performance theory to test the facilitating effect of frontline employees' post-transaction service behaviors (SBs) — diligence, inducements, information communication, sportsmanship, and empathy — as a means of adaptation to higher levels of customer demand. Findings indicate that frontline employees adapt most of their SBs' intensities to match customers' demands. The results show that some SBs actually increase the effectiveness and efficiency of frontline employees' service performance, leading to an increase in customer value and satisfaction. Customer value is found as a mediator in some of the relationships between SBs and customer satisfaction. Contrary to the conception of the negative outcomes of customer demandingness, service firms need to consider taking advantage of customer demandingness by stressing the role of frontline employees in adapting to customers’ demands.     

Psychological comfort in service relationships: A mixed-method approach

Psychological comfort reflects the customer's peace of mind and a sense of ease during a service encounter that helps in maintaining strong relationships. However, the role of psychological comfort (PC) in retail service relationships is not fully explored. To fill this research gap, this study presents a unique conceptual model grounded in the stimulus organism response (S–O-R) framework to empirically explore the stimulating effect of customer experience on psychological comfort (PC), which influences relationships quality and customer retention as the response. To evaluate the model a quantitative survey was administered on 432 bank customers followed by in depth interviews of 10 bank employees. It was found that customer experience stimulates customer's PC that leads to relationship quality and retention as the response. It was also found that relationship duration influences the customer experience-PC relationship. The theoretical and managerial implications of the findings are discussed.