Florian v. Wangenheim

The effect of word of mouth on services switching

The effects of word of mouth (WOM) on the receivers attitudes and intentions have been studied at length, but the question under which conditions WOM leads to a behavioural outcome (such as a purchase or switching decision) has received less attention. This paper studies the effects of WOM in the context of service provider switching. An empirical study is presented which researches whether perceived influence of a switching referral is related to subsequent switching behaviour, and whether the variables that have an effect on perceived influence of the switching referral also predict switching. Results show that the strength of WOM influence is determined by perceived communicator characteristics. Perceived risk dimensions, in turn, moderate these effects.

Postswitching Negative Word of Mouth

Previous research has extensively studied the determinants of customer loyalty and switching behavior but has given little attention to what happens after a customer has switched away from a service provider. In this article, the perhaps most important manifestation of such postswitching behavior—namely, postswitching negative word of mouth (PNWOM)—is investigated. Drawing from dissonance theory, hypotheses are developed and tested in an empirical study. Results from the telecommunications industry indicate that PNWOM is given frequently and that product involvement, market mavenism, perceived risk, satisfaction with the new provider, and the reason for switching the provider explain PNWOM. Implications for customer management are discussed.

High Tech and High Touch: A Framework for Understanding User Attitudes and Behaviors Related to Smart Interactive Services

Smart interactive services, in contrast with other technology-based services, require significant human-to-human interaction and collaboration in addition to the service provided by the embedded technology itself. The authors’ foundational Delphi study confirms smart interactive services (e.g., remote diagnosis, remote repair of equipment, and telemedicine) are a rapidly growing innovation category across industries. Yet, gaining user acceptance of these types of services presents a significant challenge for managers. To address this challenge, the authors employ a grounded theory approach, drawing on depth interviews, to develop a framework of barriers and facilitators to users’ attitudinal and behavioral responses to smart interactive services. The findings reveal a new set of beliefs that are critical in this context. These beliefs are tied to the human element and specifically pertain to beliefs about the “service counterpart (SC),” who is the provider’s employee controlling the technology. Control, trustworthiness, and collaboration beliefs emerge jointly as important and interrelated influencers tied to the SC. Contrary to conventional wisdom that focuses on features of the technology itself to gain user acceptance, this research encourages providers to emphasize the interpersonal elements of the service by providing control cues, raising social presence, and enhancing human trust mechanisms.

The Reinforcing Effects of Loyalty Program Partnerships and Core Service Usage: A Longitudinal Analysis

In this research, the authors develop a dynamic model of cross-buying across loyalty program partnerships and test the model using data from a European airline. They identify a reinforcing mechanism that operates when loyalty program partnerships are operating effectively. The results suggest that customer usage of (and satisfaction with) the core service influences customer cross-buying from loyalty program partners. The cross-buying behavior then reinforces the customers relationship with the core service, as cross-buying positively influences future purchases of the core service. Furthermore, the authors find that these reinforcing effects are influenced by the type of cross-buying service (partner) being considered. This dynamic reinforcement mechanism has not been shown in prior research. These findings have implications for understanding and management of loyalty programs and brand partnerships; valuating return on investments in improvements in product quality, service quality, and customer satisfaction; and more broadly, the dynamics of customer purchase behavior.

Cross-Cultural Differences in the Effect of Received Word-of-Mouth Referral in Relational Service Exchange

Because of suggested beneficial effects of word-of-mouth (WOM) referral, service companies have invested large amounts of money in customer referral programs as well as programs aimed at fostering positive communication among their existing customers. The question of cross-cultural differences in the effectiveness of WOM has recently gained increased prominence. The authors contribute to research on this topic by proposing a positive effect of received WOM on service quality perceptions among existing customers. Moreover, they predict that cultural values moderate this effect. They test the model on 1910 bank customers in 11 countries. The results show that received WOM has a positive effect on customer service quality perceptions. Furthermore, received WOM has a stronger effect on the evaluation of customers in high-uncertainty-avoidance than in low-uncertainty-avoidance cultures. No other cultural value is a significant moderator. The results imply that received WOM is also important to existing customers and that managers should adjust their strategy of referral marketing to match their target groups uncertainty-avoidance level.

Drivers of Trust in Relational Service Exchange: Understanding the Importance of Cross-Cultural Differences

Customer trust is of vital importance for relationship marketing in services. Service providers increasingly market their services globally, yet few researchers have addressed differences in customer trust across cultures. Our research fills this void by proposing a model, based on existing trust literature, that suggests the overall feeling of trust in the service provider depends on customers’ beliefs about service providers’ ability, benevolence, predictability, and integrity. The model, tested in a banking context with data from 2,284 customers in 11 countries, explains trust well across culturally diverse countries. The results of a hierarchical linear model, however, show that customers differ in the way they build trust in their service provider across cultures. Moderating effects of the cultural values of the target group largely explain this variation. Only the effect of ability on trust is robust across countries. Global service firms should consider all four trust drivers when striving to build trust. The emphasis they put on each of these trust drivers, however, should differ across countries. When applying these principles to the design of marketing activities or market segmentation, marketing managers should collect data on the cultural values of their specific target groups in particular countries or cultural milieus.

A Network Based Approach to Customer Equity Management

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 customers network value. We make propositions for future research and highlight practical implications.

Branding Access Offers: The Importance of Product Brands, Ownership Status, and Spillover Effects to Parent Brands

Introducing access as an alternative consumption mode next to ownership constitutes a major business model innovation. Managers need to better understand how to brand these new access offers and how this innovation affects current customers of the parent brand. In a series of experiments, we show that the product brand affects consumers’ access attitude less strongly than the offer’s service convenience in the carsharing context. However, in the fashion context, we find that brand prestige becomes essential for consumers’ access attitude. Regardless of the context, we repeatedly find that owners of a prestige brand evaluate new access offers more favorably than non-owners. In the carsharing context, this effect reverses for value brand owners. Furthermore, we do not find evidence that the access offer affects the parent brand negatively. Instead, we find that the parent brand is considered more innovative when a new access offer is introduced.

The Impact of Consumption Goals on Flat-Rate Choice: Can ‘‘Hedonizing’’ a Service Increase Customers’ Propensity to Choose a Flat Rate?

Flat rates are a dominant pricing scheme in many consumer service industries that largely benefit service providers: Many customers exhibit a bias and choose flat rates even though a pay-per-use plan would be less expensive for them. Yet, whereas the degree of flat-rate bias varies strongly across services, no study has determined whether consumers’ consumption goals might influence its extent. The authors argue and show that consuming services to attain hedonic gratification leads to a significantly higher flat-rate bias than using services to fulfill utilitarian needs. The three well-known flat-rate bias effects (taximeter, insurance, and overestimation) fully mediate the relationship between the consumption goal and flat-rate bias. In three experimental studies, the authors consistently show that these findings apply across different services, for a service that relies on natural variance in customers’ consumption goals, and for the same service framed as hedonic, utilitarian, or a hybrid. These findings show that managers need to be aware of major “natural” industry differences in the level of flat-rate bias. However, service providers can also actively manage and increase consumers’ hedonic consumption goals for their services and thus increase their share of flat-rate contracts. A further experiment shows that the hedonization tactic has no negative side effects on consumers’ price perceptions in terms of willingness to pay (WTP). Service providers can benefit from hedonizing their services as long as it is compatible with their value proposition.

Access vs. Ownership: Understanding Consumers’ Consumption Mode Preference

Accessing products instead of owning them is becoming increasingly popular. In case of both types of consumption modes being available, consumers face the choice between traditional ownership and access. A better understanding of consumption mode choice is not only an important step towards a theoretical basis, but also highly relevant for businesses and policy makers. This paper describes (a) the development of a formative measurement tool of consumers’ perceptions and the resulting attitude towards access and ownership and (b) the results of its application to four different product categories and to consumers with and without access consumption experience. Based on literature review and qualitative interviews, a second-order formative model is conceptualized and validated in a mixed-methods approach. It is found that functional and monetary perceptions are generally most important, followed by experiential and symbolic perceptions. On a more granular level, access offerings in different categories are perceived differently, highlighting the importance of multi-category studies. Managers, policy makers and science benefit from the provided measurement tool, the description of various applications and the implications of its utilization in this study.