Dirk Totzek

Customer Prioritization: Does It Pay Off, and How Should It Be Implemented?

It seems to be common sense that to increase profits, firms should prioritize customers (i.e., focus their efforts on the most important customers). However, such a strategy might have substantial negative effects on firms’ relationships with customers treated at a low priority level. Prior research does not indicate satisfactorily whether and how customer prioritization pays off. Moreover, although customer prioritization may be strongly present in firms’ marketing strategies, firms frequently fail to implement such a strategy. Therefore, it is also important to investigate empirically by which means firms can facilitate implementation. The authors address both issues and conduct a cross-industry study with 310 firms from business-to-consumer and business-to-business contexts together with two independent validation samples. The results show that customer prioritization ultimately leads to higher average customer profitability and a higher return on sales because it (1) affects relationships with top-tier customers positively but does not affect relationships with bottom-tier customers and (2) reduces marketing and sales costs. Furthermore, the ability to assess customer profitability, the quality of customer information, selective organizational alignment, selective senior-level involvement, and selective elaboration of planning and control all positively moderate the link between a firms prioritization strategy and actual customer prioritization.

Managing Dynamics in a Customer Portfolio

Although highly relevant for marketing practice, few studies provide conceptual and empirical insights into customer portfolio management. Furthermore, most approaches to analyzing customer portfolios are static. This article discusses three neglected key issues relevant for a dynamic customer portfolio analysis: (1) Does a static versus a dynamic valuation lead to a different prioritization of customer segments in a portfolio? (2) How does offensive or defensive management of segment dynamics affect portfolio value? and (3) Do reliable predictors for dynamics of a customers position in the portfolio exist? As a tool for customer portfolio analysis, the authors develop a segment-based customer-lifetime-value model. They capture customer dynamics by analyzing how customers switch between segments of different values across time. The authors apply their tool with longitudinal data from four firms with up to 300,000 customers. The results from the empirical analysis and a simulation study provide answers to the three key issues raised. First, compared with a dynamic analysis, a static approach overestimates the value of some customer segments but underestimates others. Second, a defensive versus offensive management of value dynamics is relatively more appropriate for middle-tier segments, whereas the opposite holds true for bottom-tier segments. Third, general customer characteristics and aggregated transaction characteristics indicate future segment dynamics, whereas specific product usage data differentiate customers according to current value.

The Impact of Endogenous Motivations on Adoption of IT-Enabled Services The Case of Transformative Services in the Energy Sector

Transformative services represent a crucial topic in future service research. Particularly in the energy sector, consumer adoption of transformative—often IT-enabled—services is essential to increased environmental sustainability. As adopting these services increases both individual and collective well-being, research has to delve more deeply into the origins of consumers’ motivations. For this reason, this study aims at augmenting the understanding of how different types of motivation determine consumers’ intention to adopt transformative services. The proposed model integrates the theory of planned behavior and the self-determination theory and is tested with survey data gathered from 462 users and 537 nonusers of home energy management services. Results indicate that consumers’ motivations are major direct determinants of intentions to adopt. While this finding notably holds when consumers perceive the adoption as self-determined and internalize associated values such as environmentalism, motivations based on external rewards and feelings of compulsion matter to a lesser extent. A comparison of users and nonusers reveals important differences in motivation, in particular that extrinsic motivations tend to be more relevant for nonusers than for users.

How Customer Satisfaction Affects Employee Satisfaction and Retention in a Professional Services Context

While retention of highly qualified employees is vital for professional services firms, prior research has largely neglected the role of customers as a driver of employee satisfaction and retention. Drawing on an experimental study and a dyadic field study, this article shows that client satisfaction is an important determinant of employee satisfaction, which in turn increases employee retention. Thus, for professional services firms, the common logic in relationship marketing that employee satisfaction affects client satisfaction can also be reversed. First, in line with balance theory, an attitudinal transfer occurs from the client to the employee which is stronger when both share the same opinion about their collaboration. Second, in line with Herzberg’s motivational theory, client satisfaction indirectly affects employee satisfaction by affecting the perceived appreciation the employee receives from the customer. These findings have three major managerial implications: First, investments into client satisfaction might pay off double by enhancing revenues and profit on one hand, and enhancing employee satisfaction and retention, on the other hand. Second, positive client feedback has positive effects on employee satisfaction and recognition. Third, these results suggest that marketing and human resource issues are intertwined in professional services firms. Thus, service firms should encourage ample communication and collaboration between these functions.

Using Multi-Informant Designs to Address Key Informant and Common Method Bias

The important key informant and common method problems in survey research are taken up in this article. The authors focus on the question how researchers can rely on multiinformant designs in order to limit the threats of key informant and common method bias on the validity and reliability of survey research. In particular, they show how researchers can effectively design studies that employ multiple informants and how multi-informant data can be aggregated in order to obtain more accurate results than can be obtained with single informant studies.

Professionalisierung des Preismanagements auf Business-to-Business-Märkten: Die Rolle der Marktorientierung und der Unternehmenskultur

ZusammenfassungAuf Business-to-Business-Märkten besteht für viele Unternehmen ein hoher Professionalisierungsbedarf im Preismanagement. Die bisherige Forschung jedoch hat das Preismanagement auf diesen Märkten, insbesondere hinsichtlich der Erfolgsfaktoren intraorganisationaler Preisprozesse, weitgehend vernachlässigt. Daher untersucht die vorliegende Arbeit den Zusammenhang zwischen der Kultur und preisbezogenen Informations- und Koordinationsprozessen als Facetten eines marktorientierten Preismanagements und deren Auswirkungen auf zentrale Erfolgsgrößen. Auf Grundlage einer großzahligen, branchenübergreifenden Stichprobe zeigen wir, dass die Marktorientierung von preisbezogenen Informations- und Koordinationsprozessen den preisbezogenen Erfolg erhöht, der wiederum zu einer höheren Umsatzrentabilität führt. Darüber hinaus identifizieren wir zentrale Gestaltungsfaktoren, die den Zusammenhang zwischen der Marktorientierung des Preismanagements und den Erfolgsgrößen moderieren und so wichtige Implikationen für Unternehmen bieten.AbstractMany firms operating in business-to-business-markets face the need for a more professional, systematic pricing. However, prior research has neglected industrial pricing, especially with regard to successful pricing practices. Therefore, this study examines the link between price-related information and coordination processes as facets of a marketoriented pricing and their impact on firm performance. Drawing on a cross-industry sample of 230 business units, we show that market-oriented pricing increases the pricing performance and thus enhances a firm’s profits. With regard to organizational culture, we find an ambivalent effect of a competitor-oriented culture on pricing performance as it positively affects market-oriented pricing and negatively affects pricing performance. Furthermore, we consider key contextual factors which moderate the link between marketoriented pricing and pricing performance and therefore provide important insights for managers.

All Customers are Equal, but Some are More Equal Should Firms Prioritize their Customers ?

Abstract Focusing marketing efforts on the most valuable customers so as to increase company profits is not as straightforward as it seems. There is a downside to customer prioritization such as negative reaction from low priority customers. Taking this into account we still show that prioritizing customers does lead to higher profitability and more return on sales. There are two reasons for this. Firstly, it has a positive effect on the key characteristics of a firm’s relationship with its elite customers while not affecting the lower level. Secondly, it reduces sales and marketing costs. Customer prioritization is more effective and efficient than equal treatment. We also show that firms can rely on six key levers relating to a company’s organizational structure and processes, enabling proper implementation of customer prioritization.

How to Communicate Uncertain Information Towards Clients as a Professional Service Provider: The Role of Uncertainty Disclosure and Communication Style: An Abstract

Professional service providers regularly have to make advice without knowing which course of action will finally work out and best address their clients’ needs. It is unclear how professional service providers can effectively communicate suchlike uncertainties towards clients. To address this issue, we conducted a multi-method study. We first conducted semi-structured interviews with 30 representatives from different professional service industries. We also conducted two experiments in the consulting and health care context. Based on the interviews, we conceptualize typical strategies of uncertainty disclosure (open vs. restrictive) and communication styles (Dictator vs. Mentor vs. Motivator vs. Friend) of professional service providers. We then empirically analyze how these factors affect key client-related outcomes (i.e., service encounter satisfaction, satisfaction, trust, loyalty) before and after a service failure. We also consider the mediating role of clients’ performance expectations. Our results indicate that professional service providers should employ the Friend communication style that aims at building a personal relationship with clients and at integrating them in the process of service provision. We show that communicating as Friend leads to more or equally favorable client outcomes than the other communication styles. Moreover, restrictive uncertainty disclosure tends to outperform open uncertainty disclosure. Particularly in the consulting context, Friends’ client outcomes are not contingent on how uncertainty is disclosed. In addition, restrictive uncertainty disclosure can amplify the negative effect of a service failure in the health care arena. This might be due to the nature of such failures, which often directly and personally affect the client’s medical condition.

Do Customers Prefer Many Tariff Options? The Role of Perceived Costs and Benefits of Variety in Pricing

In many industries firms offer pricing schemes or tariffs that include a number of alternative tariff options. Prior research is inconclusive whether customers generally prefer to have many alternative tariff options. More options increase the possibility of customers finding their preferred option. However, customers would have to evaluate all these options against each other. There is uncertainty about how these underlying processes of customers’ cost and benefit perceptions of variety in pricing ultimately affect their purchase decisions. Existing research offers little guidance for marketing practice how customers perceive a varying number of tariff options and how many options firms should ideally offer.