A sequence analysis approach to segmenting credit card customers

This research examines the longitudinal relationships between patterns of customer loyalty behavior and firm financial outcomes in the context of credit card use. By examining credit card users' transactions with a focal bank and its competitors, this study creates a typology of loyalty behavior and employs a sequence analysis to segment customers on the basis of their behavioral patterns exhibited over time. The analysis results in six distinct customer segments: Loyalist, Switching Loyalist, Switching Defector, Defector, Dormant Loyalist, and Dormant Defector. We subsequently estimate the revenue, servicing costs, and profitability associated with each segment, and assess differences across segments. We discuss the implications for managing distinct credit card customer segments and optimizing the bank's marketing resource allocation.     

The effects of social justice and stigma-consciousness on gay customers' service recovery evaluation

This study examines how social justice and the stigma-consciousness level of gay customers influence their service recovery perceptions. The results, based on an experiment involving 379 gay respondents, indicate that distributive justice, procedural justice, and interactional justice significantly affect gay customers' service recovery evaluations (satisfaction) and post-complaint behavioral intentions (negative word-of-mouth and repatronage). Also, higher stigma-consciousness gay customers show more negative service recovery evaluations and behavioral intentions than those with lower stigma-consciousness. Service providers who are interested in attracting and maintaining gay customers should create awareness among their employees about stigma-consciousness.     

Customers’ service-related engagement,experience, and behavioral intent: Moderating role of age

Though customer engagement (CE) and experience are important research priorities, empirically derived insight into these concepts and their associations remains scarce. We therefore investigate the impact of CE on experience and behavioral intent, which we explore in the tourism context. We also envisage customer age to moderate the proposed associations, thereby further contributing to the CE literature. To investigate these issues, we collected data from key tourism-sites in Jammu/Kashmir, Northern India. Using structural equational modeling, we find that CE dimensions exert differential effects on customer experience. The findings also reveal a stronger, significant effect of younger customers' (up to 39) cognitive engagement on experience, whereas a negligible effect is attained for older customers. While the paths from affective/behavioral engagement to experience are significant across all age groups, the association's strength rises with customer age. Moreover, the effect of customer experience on behavioral intention intensifies as customers get older. We conclude by outlining key implications that arise from our analyses, followed by avenues for further research.     

Online channel adoption in supermarket retailing

Introducing a new online channel is a crucial decision for brick-and-mortar retailers that requires insight and forecasts into customers' adoption and subsequent behaviour. The aim of this study is to analyse the dynamics in the behavioural heterogeneity of (new) multichannel supermarket customers when the online channel is introduced. A Latent Class Analysis (LCA) was conducted on 1151 adopters of the new online channel of a supermarket retailer to segment customers. We employed an extended “Recency, Frequency and Monetary (RFM)” model that includes customers’ purchases prior to the introduction of the new channel. Results show that adopters of a new channel are not a homogenous group of customers displaying a similar behaviour: two segments – or 35% of the sample – quit the channel after using it for some time, another segment (5%) left the company altogether, the other four segments remained multichannel to different degrees, with one shifting shopping substantially to online. Based on these results, the paper provides directions to retailers for developing Customer Relationship Management (CRM) strategies to manage the different customer segments and support channel performance evaluation and channel management decisions in a multichannel context.     

The Future of Managing Customers as Assets

SUMMARY

Most companies do a very poor job of determining the economic value of their customers. There are three primary reasons that this has been the case: (1) inadequacy of technology, (2) managements' internal focus on products (as opposed to customers), and (3) inadequacy of accounting systems. Each of these areas, however, has undergone rapid transformation in terms of their sophistication and managerial usefulness. As a result, it is manifest destiny that asset valuation and management will evolve to the evaluation of a company's most fundamental asset, its customers (i.e., customer lifetime value). Most managers have come to accept this inevitability. What managers fail to realize is just how radically an understanding of customer lifetime value will transform the business landscape. It will dramatically impact the breadth and type of data collected; the way managers view and segment customers; the types of experiences firms offer customers; the metrics executives provide to the financial markets; and the way companies structure and staff their organizations.     

A Case Study: How a Retail Jewelry Store Learned to Compete in the E-Commerce Market Place

ABSTRACT

The Case Study describes how a retail jewelry store adapted to a new e-commerce market place. Until the mid-1990s, their marketing strategy included (1) a large dramatic sign visible from surrounding streets, (2) local print and radio advertising, (3) a sales staff that aggressively pushed the perceived value and emotional component of jewelry, and (4) an after-sales follow-up program. Typical customers were in the lower to middle socio-economic segment.

E-commerce created more knowledgeable customers who recognized their buying alternatives. The Store reacted by developing several proprietary web sites, displaying products in the store “as seen on” the home shopping networks or on various web sites, and offering classes on how to become a more knowledgeable jewelry shopper. During the implementation of the e-commerce changes, problems arose in two areas: project management issues (deadlines, staffing, testing) and cultural adaptation issues. Once these issues were effectively addressed, and the e-commerce changes were implemented, sales stabilized and returned to prior levels.

The Case Study explores a well-known strategic principle: all organizations must monitor their changing environment and adapt accordingly, e-commerce is a current example; there will always be others.     

Engaging the unengaged customer: The value of a retailer mobile app

Mobile apps are becoming a go-to tactic for retailers because they offer the promise of highly convenient digital engagement. We hypothesize that two types of customers are best served by these apps — “offline-only” customers currently purchasing exclusively from the retailer's physical store, and “distant” customers who reside far from the physical store. For offline-only customers, the app complements the physical engagement they currently have. For distant customers, the app offers convenient engagement their remoteness currently precludes. We model app access and purchase behavior of 629 customers who downloaded a retailer's app. We find that apps generate more incremental sales among distant customers compared to near customers, and more incremental sales among offline-only customers compared to online customers. On an illustrative base of 100 K app users, we find accessing the app would generate $2.3 M in incremental sales. Consistent with our segmentation results, we find that the users with the greatest purchase lift (9.5%) due to app usage are those that are distant and offline-only. Our results confirm the economic value of retailer apps and their role as a segmentation strategy to enhance customer engagement.     

Cross-selling across stores or within a store? Impacts of cross-buying behavior in online shopping malls

Abstract

This study investigates the impacts of cross-buying behavior in an online shopping mall where customers can purchase from additional product categories from various independent stores. We focus on the extent to which store loyalty and relationship duration moderate the cross-buying effects on three behavioral traits: customers’ purchase rate, lifetime duration, and spending. The results reveal that customers who engage in cross-buying more intensely purchase more frequently, have longer expected lifetime duration, and spend higher amounts in each transaction. The impacts on purchase frequency and customer retention are even greater for customers who exhibit higher behavioral loyalty toward some stores. However, store loyalty is found to weaken the association between cross-buying and average spending. Further, relationship duration appears to weaken the effects of cross-buying on purchase rate and spending. These results provide new insights into the impacts of cross-buying on customer value as well as managerial implications for shopping mall owners.     

The role of warehouse club membership fee in retail competition

There are several explanations as to why warehouse clubs charge membership fees and how the fees play a role in the competitive landscape of the retail grocery market. We provide another insight into the nature of the membership fee using a model of price competition between a warehouse club and a supermarket. We show that the warehouse club's membership fee is an optimal competitive reaction to the supermarket's promotional activity. The more frequent the promotion is, the lower is the membership fee. However, the larger the promotion depth is, the higher is the fee. We show that the cherry-picker segment plays a key role behind these results. Our analysis not only provides a justification of warehouse club membership fees by discovering its duality with the cherry-picker segment but also gives managers several guidelines on yearly fee and retail price decisions.     

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.     

Prepayment and future cross-buying: an exploratory analysis

Recent research has provided important insights on consumers’ preferences for prepayment mechanisms and on its impact on consumption of a given product or service. However, little is known about how prepayment influences future purchases of goods and services. We consider this question in a contractual setting within the services industry, involving different purchasing decisions over time. Based on a large-scale empirical test, we find that prepay customers make fewer changes to their cross-buying levels (i.e., the number of different services they buy from the company) from one contractual period to another, and that this effect is more salient for the firm's new customers. We propose possible explanatory mechanisms for this effect. For instance, based on mental budgeting theory, we suggest that prepayment customers may set mental budgets and track expenditures against this budget leading them to resist further investments. Alternatively, prepayment customers may be more certain about their consumption behavior leading to fewer changes over time.

     

Understanding the role of social influence in piquing curiosity and influencing attitudes and behaviors in a social network environment

Social networks provide an innovative means for facilitating social influence as well as arousing consumer curiosity. However, research on how social influence impacts attitudes and behaviors in this context is limited. Further, even less research exists examining how curiosity impacts consumers’ behaviors, which is concerning since curiosity may be especially relevant in an online setting. To overcome these gaps, two studies were conducted which demonstrate that a consumer's curiosity toward a social network post is influenced by the group membership of the individual who created the post. In turn, curiosity leads to more positive attitudes toward the experience described or represented in the post, which leads to higher intentions to undertake that experience. Additionally, consumer susceptibility to interpersonal influence is found to moderate the relationship between group membership and curiosity. If susceptibility to interpersonal influence is strong enough, content posted by a dissociative group member can also arouse curiosity and positively influence attitudes and behavioral intentions.     

Marketing Sustainable Consumption within Stores: A Case Study of the UK's Leading Food Retailers

Sustainable consumption is a core policy objective within the UK Government's Sustainable Development Strategy and there is a growing awareness that retailers have a vital role to play in promoting more sustainable patterns of consumption. This article explores how the UK's top ten food retailers are communicating sustainable consumption agendas to their customers within stores in the towns of Cheltenham and Gloucester. The findings reveal that while these retailers are providing customers with some information on sustainable consumption the dominant thrust of marketing communication within stores is designed to encourage consumption. The article concludes with some reflections on how sustainable consumption fits into the large food retailers' business models.     

Consumer satisfaction and loyalty: Two main consequences of retailer personality

This article investigates the impact of retailer personality on consumers' satisfaction with and loyalty to the retailer, measured through attitude and future behavioral intentions. Data were collected on a convenience sample of 372 customers of a specific retailer. Using partial least squares analysis (PLS), we show that four traits (“congeniality”, “originality”, “conscientiousness” and “preciousness”) have a direct or indirect impact on one of the dependent variables studied. Hence, this article proposes a model of the consequences of retailer personality and suggests that retailer personality is an important concept that practitioners should consider when running their satisfaction and loyalty programs.     

Competing on the edge: Implications of network position for internationalizing small- and medium-sized enterprises

Three generic competitive strategies attributed to internationalizing SMEs of targeting niches, differentiating products and leveraging networks fail to adequately explain how SMEs win customers in other countries against both large and small competitors. This study distinguishes competitive strategy (how firms compete) from competitive advantage, and from competitive engagements where firms deploy their competitive advantages to win customers within business network relationships. By abductively reasoning from the competitive engagements entered into by the internationalizing SMEs from the Fleet Management Systems industry segment in New Zealand, we show that these firms often compete with foreign rivals by using their position on the edge of a business network to leverage information asymmetries across structural holes. We contribute by integrating this conception of internationalizing SME competitive strategy with the business network foundations of the Uppsala internationalization process model.     

Customer Channel Preferences in the Finnish Banking Sector

Abstract

This research examined a survey of 3,000 and indepth interviews of 30 financial customers who provided information regarding their usage of, and attitudes towards, financial distribution channels. Improvements in technology are facilitating the development of alternative delivery methods and channels, and this paper examines the implications both for customers and for banks. This study looks at customers' behavior and links it with their usage of financial distribution channels to determine if there are particular behavioral segments of customers who exhibit similar patterns of access to financial services. This should enable financial institutions to more efficiently market their delivery of financial services.     

The Power of Consequential Product Sounds

Building on theory in sensory marketing, mental simulation, and cue diagnosticity, this research investigates when consequential product sounds, or ancillary sounds generated by the normal operation of a product, can impact customers’ perceptions and behavioral intentions. Across four studies, we demonstrate how consequential product sounds coupled with imagery and phrasing of products in use can encourage customers into a mental space in which they can clearly envision using the product, also known as a process mindset. This mindset allows customers to use the amplitude of the consequential product sound to make inferences about its power, and subsequently enhances their willingness to pay for louder products (versus quiet products or those with no sound). Effects are attenuated when customers are encouraged into an outcome mindset, or a mental space in which they only consider the end benefits of using a product. We provide clear theoretical and managerial implications and, based on our findings, propose that retailers should consider incorporating consequential product sounds into customers’ shopping experiences, as these auditory cues can help to encourage a process mindset and thereby, positively impact customers’ willingness to pay.     

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.     

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).     

Consumers’ Behavioral Intentions Toward Self-Service Technology in the Emerging Markets

ABSTRACT

Self-service technologies (SSTs) allow customers to offer their own service encounters via the interaction of electronic service interfaces or machines rather than by interacting with a firm's service personnel. This lack of personal interaction generates doubts and queries in the minds of the people, especially those unaware or less aware of these technology-based services. Such a situation is quite prevalent in the developing nations (like India), where still a large number of people are apprehensive about using the latest technologies. In this regard, the present study aims to develop an integrated model designed to predict and explain the various factors that influence customers’ behavioral intentions to use or not to use one particular SST (i.e., ATM services). The study finds that bank customers are less innovative and less optimistic to try out new technologies. Usefulness of the technology helps in developing positive attitude toward the technology, which in turn affects customers' intentions to use that technology.