Strategies for creating value through individual and collective customer experiences

Despite tremendous interest in how online communities create value, existing research tends to focus on limited means through which such value is generated. In this article, we develop a conceptual model of customer value formation. This model rests on two dimensions, namely whether value is formed in the customer or provider domain and whether the value is individual or collective in nature. This enables value formation to be characterized in four ways and enables a more nuanced view of value formation to emerge. Firms are encouraged to reflect on their efforts to support each of the four value formation types. In particular, our conceptualization challenges companies to consider customer contexts outside of customer-firm interaction as important sources of value creation for customers. Such reflection enables practitioners to develop strategies for supporting individual and collective value creation across both the customer and provider domains.     

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.     

The role of customer satisfaction in enhancing customer loyalty in Malaysian Islamic banks

This study examines the role of customer satisfaction in enhancing the loyalty of Muslim and non-Muslim customers in the Malaysian Islamic banking industry. Respondents are the customers (Muslim and non-Muslim customers) visiting the bank counters and have an account with Islamic banks. A total of 660 questionnaires were distributed, and 440 were returned. The results indicate that customer satisfaction has a statistically significant positive effect on customer loyalty and intentions to switch for Muslim and non-Muslim customers. However, there were significant differences in the effects of customer satisfaction on customer loyalty and intention to switch for Muslim and non-Muslim customers. The effect of customer satisfaction on customer loyalty and intention to switch is greater for the non-Muslim than the Muslim customers.     

Evaluating discounts as a dimension of customer behavior analysis

Today, increased competition between organizations has led them to seek a better understanding of customer behavior through identifying valuable customers. Customers’ expectations about the price and quality of products and services play an important role in their selection process. In online businesses, competition and price differences between suppliers is high, so discounts will attract different customers. As a result, discounts and the frequency and amount of purchases can lead to better understanding of customer behavior. Customer segmentation and analysis is essential for identifying groups of customers. Hence, this study uses a model based on RFM called RdFdMd, in which d is the level of discount used to analyze customer purchase behavior and the importance of discounts on customers’ purchasing behavior and organizational profitability. The CRISP-DM and k-mean algorithm were used for clustering. The results indicate that using the R_dF_dM_d model achieves better customer clustering and valuation, and discounts were identified as an important criterion for customer purchases.     

Service capabilities and customer relationship management: an investigation of the banks in Taiwan

This study seeks to explain the influence of several individual service capabilities and their interactions on customer relationship management (CRM) performance in the banking industry. Two samples are analysed (bank staff and bank customers) and an empirical study is carried out using a multiple interaction regression approach. The findings show the main effect of human resources, information knowledge and marketing knowledge, and their interactions (the dyadic and conjoint service capabilities) on the effectiveness of CRM performance. The interactions are compared with the main effects, taking an overall view of capability–performance linkage. The main conclusions suggest that the latter are far more important. These findings provide important information for banks, which need to build successful long-term CRM associations with their customers, to adapt in today's dynamic environment.     

Quantifying the influence of customer experience on consumer share-of-category

Customer experience is an all-encompassing construct, and most companies go to considerable lengths to create memorable, extraordinary experiences. Nevertheless, customers experience offerings, companies, and their brands very differently. Using one qualitative and three quantitative studies we explore customers’ experiences from a financial perspective by measuring and quantifying the linkages between these and customers’ share-of-category. When measured by means of customers’ share-of-category, customers demonstrate significantly different purchasing intentions and behavior. In addition, customer retail service experiences that influence the share-of-category differ significantly between customers with a low and a high share-of-category. We expand our knowledge of customer experience by highlighting that different customer groups may perceive a similar retail experience differently, leading to a different purchasing behavior and influencing their respective share-of-category. This study expands existing research by providing empirical evidence of the link between the customer experience and customers’ purchasing behavior.     

Antecedents of customer participation in business ecosystems: evidence of customers’ psychological ownership in Facebook

Customers can influence the health of business ecosystem through their participation. What are the determinants of customer participation at the business ecosystem level? This study addresses this question by proposing a research model integrating the organizational socialization of customers, customer participation, and psychological ownership. It proposes customers’ psychological ownership as an antecedent of their participation in the business ecosystem. No study to date has empirically examined customer participation in business ecosystems. This study tests the hypotheses based on online survey data from 397 Facebook users. The results show that psychological ownership is a significant determinant of customer participation in the business ecosystem via word-of-mouth (WOM) and boycott intention. The result of our study also indicates that customer socialization significantly affects customer participation in the individual firm, which in turn leads to an increased psychological ownership. This study (a) broadens the concept of customer participation by examining it via the business ecosystem lens and (b) highlights WOM and boycott activities as examples of customer participation at the business ecosystem level.     

Moving from customer lifetime value to customer equity

We study the consequence of moving from Customer Lifetime Value maximization to Customer Equity maximization. Customer equity has traditionally been seen as the discounted sum of the lifetime earnings from all current and future customers and thus it has been largely assumed that maximizing customer lifetime value would lead to maximum customer equity. We show that the transition from CLV to CE is not that straightforward. Although the CLV model is appropriate for managing a single non-replaceable customer, the application of a CLV model to the acquisition and valuation of customers as an ongoing concern for the firm leads to sub-optimal customer relationship management and acquisition strategies. This leads the firm following a CLV maximization approach to have a smaller and less profitable customer base than one that follows a CE maximization strategy.

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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.     

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.     

Fighting churn with rate plan right-sizing: a customer retention strategy for the wireless telecommunications industry

Prior literature suggests that wireless customers have difficulty in predicting their usage requirements and they often subscribe to rate plans that are not financially optimized. However, the benefits of having wireless customers on optimal rate plans are relatively unknown due to limited research in this area. This paper aims to address this knowledge gap and presents a customer retention strategy for the wireless telecommunications industry. The usage and payment records of 1403 Canadian post-paid wireless customers are examined over a 3.7-year study period. Pearson's χ ² test and hazard function graph are used to reveal how customer churn rate is influenced by rate plan suitability. The statistical analysis demonstrates that customers who are using optimal rate plans have lower churn rate than those with non-optimal ones.     

Exploring the drivers of customer engagement behaviours in social network brand communities: towards a customer-learning model

Customer learning is regarded as a process that alters either individual cognition or the outcomes of socialisation. Understanding how the learning process works enables a brand firm to identify a customer’s latent needs. Prior studies have primarily focused on effectively positioning brand knowledge in the minds of customers, but that linear learning process does not apply to the interactive and proactive social media setting. Based on the uses and gratifications perspective, this study proposes a customer-learning model and analyses 373 online questionnaires using partial least squares structural equation modelling. The empirical results confirm that learning motivation and collaborative learning are two core components of customer learning that have positive influences on satisfaction, which in turn has a positive influence on customer engagement behaviours (CEBs) and loyalty. In addition, learning motivation is the driver of collaborative learning. Finally, CEBs also have a positive influence on loyalty. This study also concludes that the social network brand community is an informative customer-learning platform that is characterised by interactivity, collaborative learning and co-creation. Theoretical and managerial implications are also discussed.     

Effects of customer loyalty on customer entitlement and voiced complaints

The value of customer loyalty has been well documented by academicians and practitioners. Nevertheless, prior literature has paid little attention to the negative consequences of customer loyalty, for example, entitlement behaviors (e.g. requests for deeper discounts) and complaint behaviors (voicing dissatisfaction to the company). This research empirically examines the effects of customer loyalty on entitlement and voiced complaint behaviors in the context of Frequent Flyer programs in airline industry. Base on partial least squares-structural equation modeling, the results show that (1) customer loyalty has a positive effect on customer entitlement, which is the extent to which customers expect special treatment from the company; (2) the effect of customer loyalty on voiced complaints is fully mediated by customer entitlement; (3) perceived status of loyalty programs amplifies the entitlement behaviors of loyal customers, while tangible rewards of loyalty programs mitigate the entitlement behaviors of loyal customers. Theoretical and managerial implications are elaborated in the discussion section.     

Achieving favourable customer outcomes through employee deviance

This study advances current knowledge by examining how employee deviance and customer participation during a single employee–customer exchange generate favourable customer responses. This work bridges the employee deviance stream with the service encounter literature and illustrates the importance of equity theory in deviant service exchanges between customers and employees. Moreover, results add to the ongoing debate on service nepotism by canvassing the consequences from the customer’s active participation in deviant exchanges which appears to enhance customer perceptions of the exchange. A 3?×?2 between-subjects experimental design was adopted which manipulates three types of pro-customer deviance along with customer’s participation (or not) to the exchange. The dependent variables capture three types of perceived customer justice (cognitive outcomes) and customer’s affective state (affective outcome). Findings illustrate that customers approve employees’ deviance for their own benefit while also indicate favourable outcomes from deviant exchanges with employees such as higher perceived justice and a more positive affective state. The article concludes with a discussion of the theoretical and managerial implications, limitations and research directions that emerge from this study.     

基于顾客满意和顾客忠诚关系的市场细分方法研究

There exist different views and opinions on the links between customer satisfaction and loyalty. This paper suggests that the impact of customer satisfaction on loyalty varies across customers. This study choose the cell phone industry in China as an example and segmented customers with a novel method of clusterwise linear regression, based on the association between customer satisfaction and loyalty. Results revealed sample heterogeneity in relation to the two factors. The loyalty of some subgroups is positively related to satisfaction significantly, while that of other clusters is independent of satisfaction. Translated from Nankai Guanli Pinglun 南开管理评论 (Nankai Business Review), 2005, 8(5): 26–30     

Examining the relationship between customer bonding,customer participation,and customer satisfaction

This study empirically analyzes the relationship between customer bonding, customer participation, and customer satisfaction. It uses data from 804 VIP customers of South Korea's commercial banks. The hypotheses are tested using the structural equations modeling technique. The results show that social and structural bonding are the main antecedents of customer participation. Additionally, customer participation positively impacts customer participation value and worth. The findings also show that customer participation, customer participation value, and customer participation worth strongly and positively affect customer satisfaction. Furthermore, it finds that customer participation value and worth are essential mediators between customer participation and satisfaction.     

Interpreting value in the customer service experience using customer-dominant logic

Abstract

Traditionally, customer value has been examined from the perspective of the firm. New understandings of customer value from the customer-dominant logic perspective of services emphasise the need to move away from the service-dominant perspective and adopt a customer-based approach that considers value within the broader context of a customer’s lifeworld. This article explores how individual customers make sense of their participation in an extraordinary, commercially-driven consumption experience. A phenomenological approach is taken to understand the lived experience of these participants. The findings of this exploratory study reveal the highly complex nature of value in the experience in the chosen context of luxury driving experience days. Theoretical and managerial implications are discussed.     

Relating strategic market orientation and market performance: role of customer value types

A service provider achieves competitive advantage by configuring appropriate strategic orientation and customer value type. This paper addresses three important issues: (i) which customer value type (economical, relational or technical) is important for bank customers? (ii) which strategic market orientation (customer or competitor) helps in achieving the desired value type? and (iii) which value type significantly predicts market performance? We propose that a strategic market orientation pursued by a firm shall influence the customer value it intends to offer so as to maximize the market performance. Using data collected from 538 bank customers, this study reveals that when there is a perfect match between strategic market orientation and value being perceived by its customers, a firm shall achieve strategy-value fit and realize optimal market outcomes in the form of customer satisfaction, acquisition, retention, cross-selling, and up-selling. Furthermore, a bank shall realize maximum level of market performance if it pursues both customer and competitor orientation and endeavors to deliver technical/functional value to its target customers. The paper concludes with managerial implications and future research directions.     

Exploring the relationship between individual values and the customer orientation of front-line employees

Abstract

Because of the nature of services, namely the inseparability of production and consumption, employee behaviours influence customer perceptions of service quality and satisfaction with the service provider. In particular, customer-oriented employees seek to help customers by addressing their needs, and this contributes to the building of customer satisfaction and the development of a relationship. Not surprisingly, research has been investigating the drivers of employees’ customer orientation. This paper examines how individual values influence the customer orientation of front-line service employees, a topic that has been unexplored in extant literature, and this is useful for the selection of employees who match the firm’s service strategy. To accomplish this, the study relies on the Schwartz value theory, which is applied to front-line employees in banking. The findings indicate that both resultant conservation and resultant self-enhancement affect the customer orientation of employees, and that these effects are moderated by job satisfaction and autonomy.     

Do customer participation and cognitive ability influence satisfaction?

Under some circumstances, increased customer participation can enhance customer satisfaction. However, the precise mechanism by which participation might increase satisfaction has not been explored in the literature. This paper considers whether a customer’s cognitive ability might affect the relationship between participation and satisfaction. A causal model has been developed to examine the potential interactive effects of participation and cognitive ability on satisfaction, and a simple quantitative model has been proposed to simulate these effects. The results of both a numerical simulation analysis and a quantitative analysis of case study data indicate a significant main effect of cognitive ability on satisfaction. Additionally, an interactive effect has been observed, whereby higher cognitive ability results in higher satisfaction, given a minimum degree of customer participation in the service. Among this study’s implications is that customers with different cognitive abilities should have different degrees of participation that act to maximize their satisfaction.