The Effects of Channel Experiences and Direct Marketing on Customer Retention in Multichannel Settings

In customer relationship management (CRM), it is critical for managers to understand how and when customers terminate their relationships with the company in order to make more accurate predictions for CLV. However, in many non-contractual settings, customer churn is not easily observed, which presents difficulty for estimating customer retention. In this research, we present a framework for estimating multichannel customer relationship dynamics in a non-contractual setting that flexibly allows for relationship revival and investigates the effects of different channel experiences and marketing communication on retention and profitability. We use a multi-segment, multivariate hidden Markov modeling framework to model three managerially relevant customer behaviors: purchase amount, purchase incidence, and channel choice. Using data from a multichannel clothing retailer, we uncover two latent relationship states that customers migrate to and from — an active state and an inactive state characterized by different levels of purchase frequency, responsiveness to marketing, and profitability. We find that an offline (retail-store) channel can be used to migrate customers from an inactive state to an active state, effectively serving the purpose of “education” or “revival,” whereas an online channel is most effective in keeping the existing active customers active, thus serving the purpose of “retention”. Using counterfactual analysis, we highlight an opportunity for the multichannel firm to optimize marketing strategies to dynamically manage and increase the retention and hence also the value of its customer base.     

Applying Transactional NPS for Customer Journey Insight: Case Experiences and Lessons Learned

ABSTRACT

While the concept of “customer journeys” is widely taken up to support service design and management, practical frameworks for routine monitoring of customer experience in the context of customer journeys are lacking. This article proposes a framework for applying the widely used transactional Net Promoter Score (NPS) as a means for gathering insight into customers' experiences of a customer journey. We present lessons learnt from three case trials of the framework elements within a telecom service provider, involving the analysis of more than 1,700 quantitative and qualitative customer responses from transactional NPS surveys.     

DESIGNING AND MANAGING MULTIPLE PIPELINES

There is a growing recognition that supply chains should be designed from “the customer backwards” rather than from “the company outwards.” If such a view is accepted then the implication is that since the organization will likely be serving multiple markets or segments, there will be the need to design and manage multiple pipelines to serve those different customers. To assist decision makers in their choice of appropriate supply chain design, a framework is proposed based upon multiple criteria. A case study is presented which highlights the benefits of selecting, engineering, and operating multiple pipelines tailored to the needs of the marketplace.     

A Preliminary Study of Fintech Industry: A Two-Stage Clustering Analysis for Customer Segmentation in the B2B Setting

ABSTRACT

This practitioner note proposes a new approach considering two-stage clustering and LRFMP model (Length, Recency, Frequency, Monetary and Periodicity) simultaneously for customer segmentation and behavior analysis and applies it among the Iranian Fintech companies. In this practitioner note, the K-means clustering algorithm and LRFMP model are combined in the customer segmentation process. After initial clustering, for a better understanding of valuable customers, additional clustering is implemented in segments that needed further investigation. This approach contributes to a better interpretation of different customer segments. Customer segments, consisting of 23524 business customers are analysed based on their characteristics and appropriate strategies are recommended accordingly. The first stage clustering result shows that customers are best segmented into four groups. The first and fourth segments are clustered again and the final 11 groups of customers are determined. This note provides a systematic and practical approach for researchers and practitioners for segmentation, interpretation, and targeting of customers especially in the B2B setting and the Fintech industry and helps managers to make effective marketing strategies and enhance customer relationship and marketing intelligence.     

shopper taxonomy for retail strategy development

Segmentation of shoppers has been explored by many academic researchers and business practitioners seeking to understand shopping behaviour or to develop marketing strategies for particular customer groups. Market segmentation holds the key to successful marketing strategy as it encourages understanding of the key variables that differentiate specific segments.

The shopper taxonomy determined through this study is based on a set of variables that is relevant and appropriate for shopper segmentation and reflects the key aspects important to shoppers in motivating shopping behaviour towards a specific retail location. This taxonomy extends the proposed motivational taxonomy of Westbrook and Black (1985), derived from Tauber's (1972) earlier research. Westbrook and Black defined this taxonomy through shopping motives, and identified categories of product-oriented, experiential and a combination of product and experiential shoppers. Their research findings, however, pointed to a six-cluster typology, defining department stone shopping around seven motivations aligned with evaluating options and acquiring the products, engaging in the sales process and gaining stimulation and affiliation through the retail environment.

The “apathetic”, “shopping-processed involved” and “choice optimisation” shopper segments described by Westbrook and Black align with the “have to” “experiential” and “practical” “segments found in this study in terms of their focus on the shopping activity itself and the affiliation and stimulation motives associated with the shopping activity. Other associations between shopper segments across the two studies are less clear, and may be explained through the differing purposes for which the studies were undertaken and resulting variation in the measures used to define the motivational constructs.     

The omnichannel continuum: Integrating online and offline channels along the customer journey

This paper provides a framework for conceptualizing omnichannel integration as a continuum, identifies phenomena that determine how firms should position along that continuum, and summarizes empirical research regarding these phenomena. The framework combines the customer journey (search to purchase to aftersales) and channel choice (online vs. offline). This generates a range of omnichannel strategies, anchored by “Unconnected” on one extreme and “Complete” on the other. In between, “Vertical” strategies integrate channels over the customer journey, while “Horizontal” strategies integrate across channels at a given stage in the customer journey. We draw on more than 200 articles to identify 10 consumer and marketing phenomena (“determinants”) that influence where a firm should position along the continuum. This however raises challenges. For example, empirical research surprisingly finds many customers belong to an offline-focused segment. This suggests a Vertical strategy linking offline channels. However, today's turbulent retail environment questions whether the offline-focused segment will endure. Should the retailer cater to offline-focused customers or facilitate their progression to “multichannelism”? Another finding is that consumers strongly prefer consistency across channels. This suggests a Horizontal strategy. However, consistency might create channel cannibalization. How can the retailer avoid this? We discuss these and several other findings regarding the impact of the 10 determinants on omnichannel continuum strategy. We identify issues researchers need to research and managers need to consider when developing omnichannel continuum strategy.     

Identifying multi-channel value co-creator groups in the banking industry

The purpose of this paper is providing a value co-creation management framework in the banking industry using the data analysis. Moreover, a multi-channel segmentation approach will be developed in order to identify customer segments based on the use of each channel. Managing value co-creation can be defined as determining the channel that may be used by the customer and the kinds of encounters that lie in these channels to have different impacts on the customer for various types of encounters. The model is built on the basis of the related literature and the collaboration of a Customer Relationship Manager in a large bank in Iran. Then, a multi-channel segmentation model is developed based on the RFM variables of the five banking channels for each customer. Next, about 11,000 customers of the bank is segmented by comparing the k-means and DBSCAN algorithms. Finally, by adapting customer segments on the value co-creation framework, three general groups are identified based on the type of encounter that lies in each channel. Moreover, twenty-seven small groups are recognized based on the desirability of the customer use of the channels.     

Segmenting Dissatisfied Restaurant Customers Based on Their Complaining Response Styles

ABSTRACT

This study attempts to segment dissatisfied restaurant customers based on their complaining response styles and to identify socio-demographic variables that discriminate those segments. Findings suggest the presence of two customer clusters with distinct response styles; namely “talkers” and “voicers.” The results indicate that all restaurant customers respond to a dissatisfactory dining experience. Most of them utilize multiple responses to dissatisfaction. Of the demographic variables examined, only dining out frequency and marital status were found to be potent variables.     

“Let's make a deal:” Price outcomes and the interaction of customer persuasion knowledge and salesperson negotiation strategies

In response to increased consumer empowerment and frugality, many business-to-consumer (B2C) firms now negotiate “deals” with customers. Understanding how buyer and seller inputs affect negotiation outcomes is important because successful completion, or a closed sale, results in perceived value (based on the negotiated price) for both the customer and the seller. We suggest negotiation is influenced by the persuasion knowledge of the customer and the negotiation strategies used by the salesperson to manage conflicts that arise during the process. Using unique dyadic data from the automotive industry that combines multisource (salesperson and customer) survey data with objective purchase price information, we find that price outcomes and customer satisfaction depend on the different interactions of customer persuasion knowledge and salesperson negotiation strategies. The results suggest that perceived value may be generated for both the selling firm and the customer based on these unique inputs.     

Customer Lifetime Value as the Basis of Customer Segmentation

SUMMARY

In this article, we examine current trends in customer life-time value and customer segmentation models and identify key issues for future research. CLV-based segmentation is a segmentation approach that groups customers into meaningful segments based upon customer lifetime value and (potentially) other factors. In the article, we discuss the extent to which CLV-based segmentation meets the criteria for effective segmentation. We also identify six areas for future research: (1) models and management of “micro-segments,” (2) using CLV-based segmentation to improve the efficiency of marketing programs, (3) the need for more dynamic CLV-based segmentation models, (4) applying CLV-based customer segmentation to new products and new customers, (5) challenges associated with implementing CLV-based segmentation, and (6) the need for new models that enable firms to segment customers by response to marketing activities and CLV at different points in the customer decision process.     

New competitive spaces: Jointly investing in new customer logic

This article offers an organizing framework for new “competitive spaces” based on customer rather than linear logic and a set of alternate terms and tools to assist the modern corporation in producing solutions which are both relevant and cost effective to end user markets. It calls for a fundamental paradigm shift away from linear corporate assumptions and concepts, which sought to push as much down the system as possible. The author offers a “reverse customer logic” and language, which begin with end user customers and then asks who does what, when, where, and how, to achieve what, when. She provides structured principles to facilitate the transformation from where the managers are to where they need to go in an everchanging environment.     

Loyalty Formation for Different Customer Journey Segments

The proliferation of new touchpoints empowers today’s customers to design their own journey from search to purchase. To address this new complexity, we segment customers by their use of specific touchpoints in the customer journey, investigate the association of several covariates with segment membership, consider the rise of mobile devices as potential “game changers” of existing segments, and explore how the relationships among product satisfaction, journey satisfaction, customer inspiration, and customer loyalty differ across segments. Based on anticipated utility theory and using latent class analyses on large-scale data from two samples of 2,443 and 2,649 journeys, we identify five time-consistent segments―store-focused shoppers, pragmatic online shoppers, extensive online shoppers, multiple touchpoint shoppers, and online-to-offline shoppers―that differ considerably in their touchpoint and mobile device usage, their segment-specific covariates, and their search and purchase patterns. The five segments remain unchanged in the two data sets even though the usage of mobile devices has increased substantially. Furthermore, we find that the relationships between various loyalty antecedents and customer loyalty differ between the segments. The insights from this paper help retailers develop segment-specific customer journey strategies.     

网络环境客户知识挖掘与管理

以零售业为背景提出一个客户知识挖掘系统框架,运用关联规则和聚类分析方法挖掘客户知识,同时提出一个客户知识管理体系结构,对客户知识进行维护和管理,实现知识共享、创新和增值。     

The Influence of Culture on Trust Judgments in Customer Relationship Development by Ethnic Minority Small Businesses

This paper explores the influence of culture on trust judgments in customer relationship development by ethnic minority small businesses (EMSBs). Chao and Moon's “cultural mosaic” of overlapping “cultural tiles” is used to develop a generic conceptual model regarding the relationships between multiple cultural identities, trust, and customer relationship development. Drawing on qualitative data from semistructured interviews with 134 Turkish EMSBs in London (United Kingdom), our findings contribute to the understanding of how different cultural tiles influence the dimensions of trust judgments in relationship development between EMSBs and different customer groups. Seven propositions and a theoretical framework regarding these relationships are offered for future research.     

An Empirical Investigation of Marketing Programme and Process Elements in the Home-Host Scenario

SUMMARY

The two major strategies often available to international marketers are standardisation and adaptation when deciding to operate in a foreign host market. Both strategies have pros and cons. Drawing on the findings of previous theoretical and empirical studies, this study proposes a “marketing programme/process and performance” framework. The study employed a linear multiple regression (OLS) analysis method to examine the proposed framework, based on the experience of 233 Australian and New Zealand (home markets) firms operating in the Greater China region (host markets). Factors identified as significantly associated with adaptation of programme/process include “employee” and “employer” immigrant effects, government regulations, economic development, competitive environment and product life cycle. Factors identified as influencing firm performance include product adaptation, product type and market entry mode.     

The integrated use of social media,digital, and traditional communication tools in the B2B sales process of international SMEs

Social media and digital tools are gradually changing the way firms market themselves. Understanding how these communication tools are used by sales functions within business-to-business (B2B) markets could clarify the dynamics underpinning the sales process in an increasingly technology-mediated world. This paper explores how social media, digital, and traditional sales communication tools are leveraged during the three main phases of the B2B sales process within international SMEs.The article’s grounded-theory approach illustrates that social media can be particularly helpful in engaging international prospects. Digital communication tools seem to be most prevalent in the persuasion phase, whereas more traditional communication tools still prevail in customer relationship management. However, there seem to be some important potential boundary conditions, including relationship culture, location proximity, technology innovation/resources, and strategic importance of the customer that affect the way international SMEs use different communication tools during a sales process. We develop a framework for understanding the B2B sales process flow with sales communication tools included for international SMEs.     

A typology of viral ad sharers using sentiment analysis

Viral advertising is the most popular manifestation of viral marketing phenomena. The purpose of this study is to demonstrate sentiment analysis as a promising tool to quantify consumer responses towards branded viral video advertisements and thereupon, propose a sentiment-based typology of viral ad sharers. Results of this experimental study (1) suggest that sentiment-based measures of consumer responses offer better prediction of consumers’ ad sharing intentions compared to the traditional and widely used thought-listing method; and (2) help identify four distinct segments of viral ad sharers (based on the relative strength of ad- and brand-related sentiments), namely: “Active”, “Brand-fanatic”, “Content-hungry”, and “Dormant”, labeled as ABCD typology of viral ad sharers. This study highlights that for creating successful viral campaigns, marketers should consider the distinctive characteristics of these four segments of viral ad sharers (based on their processing of ad content and brand information) to identify the right seeds to initiate a viral campaign.     

Ethical Customer Value Creation: Drivers and Barriers

There is a long-standing discussion on the positive interactions between enterprise value creation and business competitiveness. The corporate value can be seen as being created from three major sources within the cycle – from employees, from processes, and from customers or investors through reinvestment. To achieve competitive advantages, a firm must create more value than its competitors in the industry. Emphasizing that, firms should explore the positive drivers of customer value creation, allowing for a true value creation that will lead to increments in competitiveness. In reality, however, there are also barriers that hinder customer value creation. Targeting the above issues that have not yet been explored or analyzed, we have collected related literature at the first stage. Based on these presumable assumptions, this paper then conducts an empirical study by surveying and analyzing the relevance given by the investigated leading machinery measuring equipment firms in Taiwan, regarding the concerns as drivers and barriers in relation to customer value creation. This paper especially aims to answer several key questions: What drivers revolving around employees and processes can facilitate the organization to create more value for its customers? Conversely, what barriers block the organization from creating value for customers in examining the same dimensions? Does value creation direct an organization’s profitability and competitiveness? Our questionnaire survey results show that the most recognized and agreed drivers of customer value creation in consideration of employees are “distinctive skills”, “personal experience”, “learning and training”, and “team work”; and, in regard to the firm’s processes, the key drivers are “innovation and evolution”, “R&;D capability”, and “capability for differentiation”. Conversely, the most recognized and agreed barriers to customer value creation in relation to employees are a “distrustful environment” and “inadequate knowledge”; and, in terms of processes, they are “short of core technology”, “poor resource support”, and “bad services and attitudes”. Furthermore, our in-depth interview outcomes reveal that “capital sufficiency” and “mergers and acquisitions” are in practice considered to be other important customer value creation drivers; in contrast, “cultural and structural barriers” and “short of mechanisms to measure customer value creation effectively” are viewed as additional critical barriers to customer value creation.     

If employees “go the extra mile,” do customers reciprocate with similar behavior?

This study proposes an integrated framework depicting the effects of two types of employee behavior (employee citizenship behavior and employee dysfunctional behavior) on customer satisfaction, which in turn, influences customer commitment. Customer satisfaction and commitment are then expected to affect two types of customer behavior (customer citizenship behavior and customer dysfunctional behavior). A survey of matched responses from 123 employees and 590 customers reveals that employee citizenship behavior, employee dysfunctional behavior, customer satisfaction, and customer commitment are important predictors of customer citizenship behavior and customer dysfunctional behavior. Furthermore, this study identifies variables (relationship age, group size, and communication frequency) that moderate the relationships being considered. The results show that the effects of two types of employee behavior on customer satisfaction are stronger when relationship age and communication frequency are higher. © 2008 Wiley Periodicals, Inc.     

Challenges for B-to-B Doctoral Programs: A Commentary on “Doctoral Programs in Business-to-Business Marketing: Status and Prospects,” by Erwin Danneels and Gary L. Lilien

ABSTRACT

The fast-paced development of the Internet as a mechanism for efficient communication and transactions has led to the growth of diverse forms of electronic business-to-business marketing linkages. Such linkages have profound implications for the development and exploitation of newer constellations of supply chains as well as for the re-design and re-orientation of existing ones. Newer sources of value and competitive advantage enable firms to better manage their existing relationships with suppliers and customers. Moreover, firms are now equipped with better tools for engaging in advantageous alliances with other firms possessing complementary resources.

While various Internet-based business-to-business (B2B) business models have failed in recent times, most existing B2B exchanges can be classified into a general typology based on the type of linkages, access and governance. Three major types of B2B buyer-seller linkages are identified as “net marketplaces,” “industry consortia,” and “virtual private networks.” This paper evaluates the comparative properties of these major types of exchanges and identifies various antecedent factors that would impinge on a firm's decision to participate in any of these types of exchanges.