Showing papers in "Journal of Relationship Marketing in 2006"

The Climate for Service: A Review of the Construct with Implications for Achieving CLV Goals

Abstract: SUMMARY We develop a framework in which internal employees' diagnoses of their firm's service climate determine their role behavior towards customers and, ultimately, customer satisfaction, loyalty, retention and shareholder value. Elements of the framework include: (1) foun dation issues (fundamental human behavior issues like the presence of necessary resources and the quality of leadership), (2) internal service (the quality of service employees report they receive internally from others), (3) service climate (the degree to which management emphasizes service quality in all of its activities), and (4) customer-focused service behavior. How this research is done is reviewed and research supporting elements of the framework is described. How the approach can be adapted for promoting CLV goals is explicated and answers to some frequently asked questions about change to an organization with a service quality and CLV focus are described.

Customer Lifetime Value and Firm Valuation

Abstract: SUMMARY Unlike most marketing metrics, CLV provides information which is directly relevant to marketing decision makers, non-marketing executives such as CFOs, and financial analysts. This paper highlights why and how CLV is financially relevant. It explicitly compares CLV-based valuation with four finance-oriented methods (DCF, P/E ratio, customer counting, and extrapolation). We also discuss implications for marketing managers, financial executives as well as educators.

Developing Buyer-Seller Relationships Through Face-to-Face Negotiations

Abstract: SUMMARY This paper reviews the findings of research into information exchange in real-life negotiations in business-to-business (B2B) relationships. Despite the recognition by both practitioners and academics of face-to-face negotiation as a core competence essential to the longevity of business relationships, there has been little research into verbal negotiator behaviour in this context. Based on observation of 12 substantive negotiations, wherein the parties were engaged in strategic relationship development, the findings indicate distinct patterns of verbal behaviour at different stages of relational development. This has important implications for the development of theory as well as the behavioural stances adopted by individuals engaged in relational development through the process of face-to-face negotiation. It is contended that enhanced understanding of this important aspect of B2B relationships leads to the development of more closely aligned strategic plans which may improve return on relationa...

Relationship Marketing and the Challenge of Dialogical Interaction

Abstract: SUMMARY Our aim in this article is to challenge relationship marketing's hidden monological assumptions, and as a redress, position dialogical interaction at its core. First, we reflect on the common sense of ‘marketing communication’. Next, we clarify the concept of ‘dialogue’. We then comment on the concept of dialogue in markets, building on Karl Popper's idea of an open society, followed by scrutiny of general marketing practice to show that such dialogue is absent. We then consider the potential for marketing to be dialogical in nature. To do this we will make a necessary distinction between informational interaction, communicational interaction, and dialogical interaction. Finally, we draw the conclusion that dialogue is not so much a method of communication but an orientation to it, and consider some implications for marketing theory and practice.

Trust, Satisfaction and Loyalty in Customer Relationship Management

Abstract: SUMMARY In an attempt to increase customer loyalty amid increasingly competitive business environments, organizations are looking to customer relationship management (CRM) to help provide a solution. In spite of CRM failure rates cited as being as high as 70%, organizations continue to invest hundreds of thousands of dollars on CRM implementations. Attempts of past research to resolve why failure rates are so high have tended to focus on technological factors such as database integration or factors internal to the organization such as system adoption or organizational culture. While these areas are important, reactions of customers may also play a role. This paper uses justice theory to investigate the potential impact that customer involvement in a CRM implementation may have on customer loyalty. Propositions are provided to guide future research.

CLV: The Databased Approach

Abstract: SUMMARY It is becoming increasingly clear from the literature that there is a need for a metric that can objectively measure future profitability of the customer to the firm. This paper traces the emergence of such a metric—the customer lifetime value (CLV) and discusses the two measures of computing CLV—the aggregate approach and the individual level approach. Subsequently, eight strategies that are available to firms for maximizing CLV are discussed. These strategies assist firms in deciding how to: select the best customer, make loyal customers profitable, optimally allocate the resources, pitch the right product to the right customer at the right time, link acquisition and retention to profitability, prevent customer attrition, encourage multi-channel shopping behavior, and maximize brand value. Each of these strategies was successfully implemented by different firms across various industries, resulting in significant increases in the bottom-line. Further, the challenges in implementing a CLV-based fr...

A Network Based Approach to Customer Equity Management

Abstract: SUMMARY The customer equity concept has attracted substantial interest from academics and practitioners during the last years. While direct drivers of customer equity such as customer transactions, cross- and up-buying behavior have been well understood and researched, indirect effects, and in particular social network effects have been ignored, although it is well known that brand community influence, word of mouth communication and other social effects are powerful influencers of buying behavior and should thus not be ignored in customer management. Thus, we propose that the customer equity perspective should evolve into a customer network equity perspective. In the following, we develop and present a theoretical framework for extending current thinking on customer equity towards the network perspective. In particular, we derive, based on the social network literature, characteristics that are likely to be powerful predictors of a customer's network value. We make propositions for future research and hi...

Are Variety-Seekers Bad Customers? An Analysis of the Role of Recommendations in the Service Profit Chain

Abstract: SUMMARY Variety-seeking behavior occurs if customers derive utility from a change of service providers. It has negative consequences for the firm's profits, because it functions as a moderating factor in the relationship of customer satisfaction and customer loyalty. Even by offering high service quality variety-seekers cannot be retained. Therefore variety-seekers are often seen as “bad” customers, because they are not loyal to the firm. This article will show variety-seeking behavior in a more positive light. Variety-seekers are satisfied customers and therefore they are likely to engage in positive word-of-mouth communication. Recommendations will help to attract new customers and thus increase profits.

Customer Lifetime Value as the Basis of Customer Segmentation

Abstract: 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 approac...

An Exploratory Analysis of CRM Implementation Models

Abstract: SUMMARY Customer Relationship Management (CRM) as a concept is a well-researched area of marketing theory. Since the 1990s the use of relational marketing approaches in consumer markets has found many managerial applications. However, the implementation considerations of CRM remained under-researched from a conceptual perspective, especially as implementation of many CRM projects are perceived as providing limited success. By using an exploratory, qualitative, research design, principally based on a Delphi methodology, this study highlights some crucial aspects of CRM implementation. Two clear CRM implementation foci can be distinguished: a dominant “hard” implementation of CRM (focussing on analytics, centralisation, and campaign management) and a “soft” implementation of CRM (focussing on decentralised customer experience management at the touch point level). Further analysis of the “hard” implementation model shows that companies using this path often have only a vague strategic understanding of the CR...

The Future of Relationship Marketing

Abstract: * Preface * The Future of Relationship Marketing (Adrian Palmer and David Bejou) * Relationship Marketing: The Challenge of Dialogical Interaction (Richard J. Varey and David Ballantyne) * Trust, Satisfaction and Loyalty in Customer Relationship Management: An Application of Justice Theory (Lyle R. Wetsch) * Are Variety-Seekers Bad Customers? An Analysis of the Role of Recommendations in the Service Profit Chain (Herbert Woratschek and Chris Horbel) * The 4Ps of Relational Marketing, Perspectives, Perceptions and Paradigms: Learnings from Organizational Theory and the Strategy Literature (Jaqueline Pels and Michael Saren) * An Exploratory Analysis of CRM Implementation Models (Stephan C. Henneberg) * Developing Buyer-Seller Relationships Through Face to Face Negotiations (Tracy G. Harwood) * Index * Reference Notes Included

Approaches to the Measurement and Management of Customer Value

Abstract: SUMMARY Determining and managing customer lifetime value is one of the most important strategic objectives of companies today This paper critically examines some of the most popular approaches traditionally used to measure the value of customers in a company's portfolio The methods reviewed include RFM and total revenue approaches to differentiating the value of customers Although these methods have relative advantages, they have serious drawbacks that limit the ability of managers to accurately assess customer value An alternative model for the measurement and management of customer value is proposed

Developing relationship equity in international markets

Abstract: SUMMARY One fundamental premise driving relationship marketing theory and practice is that a firm's relationships with its customers enhances their satisfaction and loyalty to the firm and that such loyalty contributes to higher profitability for the firm. We label the outcome of relationship marketing strategies as relationship equity and using extant research from the U.S. and Europe, we suggest strategies for enhancing relationship equity in international markets. We suggest that relationship equity can be developed through both personal relationships and consistent processes and outcomes. We visit core assumptions of relationship equity in the context of international markets and advocate that relationship marketing strategy needs to be conceptualized and executed differently in different countries. We also offer specific implications for relationship marketing theory and practice in international markets.

The 4Ps of Relational Marketing, Perspectives, Perceptions, Paradoxes and Paradigms

Abstract: SUMMARY The aim of this paper is to explore how different underlying worldviews in marketing affect the perception of the environment and how these impact the choice between transactional or relational offerings. Furthermore, we aim to show that not only positivistic and interpretivist paradigms are present in all of the management disciplines, in strategy, in organizational theory, in marketing, etc., but also that managerial disciplines seem to be moving from the reign of the positivistic schools, through the emergence of the interpretativist schools, and now towards a pluralistic approach. The analysis of the underlying worldviews is important for relationship marketing in practice because it may provide another, deeper-level explanation for the choices that managers make regarding transactional, relational and pluralistic offerings. At the theoretical level, it may help explain how and why the new RM paradigm developed in the marketing.

Dimensions and Implementation Drivers of Customer Equity Management (CEM)—Conceptual Framework, Qualitative Evidence and Preliminary Results of a Quantitative Study

Abstract: SUMMARY Customer equity has become a major marketing goal in many industries. In the existing literature on customer equity, there is a strong emphasis on measuring customer equity (or customer lifetime value), while there is a lack of research on how to manage customer equity and how to implement a systematic Customer Equity Management (CEM). In this paper, based on theoretical considerations as well as on qualitative and quantitative research applying confirmatory factor analysis, we identify three dimensions of Customer Equity Management structuring a firm's CEM activities: analytical CEM, strategic CEM and operational CEM. Further, three types of CEM implementation drivers are identified which represent determinants of the three CEM dimensions. We develop measures for both the three CEM dimensions and the three implementation drivers. These measures help companies evaluating their status regarding CEM and represent the basis for empirical studies regarding the determination and effects of CEM.

How Customer Lifetime Value Is Changing How Business Is Managed

Abstract: SUMMARY In the quest for sustainable competitive advantage, managers have sought to differentiate themselves through a customer (as opposed to product) focus. This has given rise to successive strategies designed to improve the customer experience (e.g., objective quality, service quality, customer satisfaction, customer retention, customer loyalty, etc.). The problem, however, is that a satisfied, loyal customer who is persuaded to consistently buy a firm's product or service over and over again because of its quality can be and often is unprofitable. Therefore, using such strategies does not guarantee increased profits. As a result, firms will increasingly rely on the measurement and management of customers' lifetime values to guide their customer loyalty efforts.

Strategies for Maximizing Customer Equity of Low Lifetime Value Customers

Abstract: SUMMARY The management of customer equity is becoming a major issue for firms. Traditionally, firms have concentrated on lifetime customer value and the assets that a firm can derive through relationships with customers who have high lifetime value or high equity. The majority of research in this area has examined strategies used to maximize sales and profits from high lifetime value customers. The present research examines strategies that firms need to follow with customers with low lifetime value. This paper suggests that firms develop strategies for “transactional” and “discount” customers who have traditionally been classified as low lifetime equity customers. Through an examination of extant literature and industry strategies the paper examines the reasons for ignoring these segments, and proposes strategies that will enhance segment penetration and firm performance. Implications for managers are also highlighted.

Customer value based entry decision in international markets

Abstract: Market entry decisions are some of a firm's most important long-term strategic choices. Still, the international marketing literature has not yet fully incorporated the idea of relationship marketing in general, and the customer value concept in particular, as a basis for market entry decisions. This article presents some conceptual ideas about a customer value based market selection model. The metric International Added Customer Equity (IACE), a straightforward decision criterion derived from the customer equity concept is presented as an additional decision criterion for export market selection and ultimately market entry.

The Future of Managing Customers as Assets

Abstract: 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; ...