Ina Garnefeld

Modeling the Impact of Corporate Reputation on Customer Satisfaction and Loyalty Using Partial Least Squares

Reputation is one of the most important intangible assets of a firm. For the most part, recent articles have investigated its impact on firm profitability whereas its effects on individual customers have been neglected. Using data from consumers of an international consumer goods producer, this paper (1) focuses on measuring and discussing the relationships between corporate reputation, consumer satisfaction, and consumer loyalty and (2) examines possible moderating and mediating effects among the constructs. We find that reputation is an antecedent of satisfaction and loyalty that has hitherto been neglected by management. Furthermore, we find that more than half of the effect of reputation onto loyalty is mediated by satisfaction. This means that reputation can only partially be considered a substitute for a consumer’s own experiences with a firm. In order to achieve consumer loyalty, organizations need to create both, a good reputation and high satisfaction.

Growing Existing Customers' Revenue Streams Through Customer Referral Programs

Customer referral programs are an effective means of customer acquisition. By assessing a large-scale customer data set from a global cellular telecommunications provider, the authors show that participation in a referral program also increases existing customers’ loyalty. In a field experiment, recommenders’ defection rates fell from 19% to 7% within a year, and their average monthly revenue grew by 11.4% compared with a matched control group. A negative interaction between referral program participation and customer tenure reveals that the loyalty effect of voicing a recommendation is particularly pronounced for newer customer–firm relationships. A laboratory experiment further demonstrates that referral programs with larger rewards strengthen attitudinal and behavioral loyalty, whereas smaller rewards affect only the behavioral dimension. This article contributes to our theoretical understanding of the roles played by the commitment–consistency principle and positive reinforcement theory as mechanisms underlying the effectiveness of customer referral programs.

Walk Your Talk: An Experimental Investigation of the Relationship Between Word of Mouth and Communicators’ Loyalty

Research provides ample evidence regarding the impact of word-of-mouth (WOM) communication on recipients. Service providers increasingly attempt to harness this power of WOM by introducing referral reward programs and other marketing instruments that aim to stimulate positive WOM. However, scholars have neglected to research the possibility that providing WOM also has consequences for the sender. Building on self-perception theory, this article argues that recommending a service provider improves the current customers’ loyalty to the provider and that positive WOM is not only effective for gaining but also for keeping customers. By conducting experiments in two different service settings, it is demonstrated that providing a recommendation influences the senders’ attitudinal and behavioral loyalty. The effect is found to be stronger for customers with low expertise in the service category and little experience with the provider. This means that encouraging customers in the early stages of their customer life cycle to give recommendations is specifically effective in increasing loyalty to the provider. Managers should consider using positive WOM as a loyalty-enhancing instrument and take the additional value from increased loyalty of their customer base into account for return-on-marketing calculations regarding WOM marketing campaigns, as well as customer equity calculations.

Managing the Bright and Dark Sides of Status Endowment in Hierarchical Loyalty Programs

In service industries, hierarchical loyalty programs are common relationship marketing instruments that award elevated status to customers who exceed a certain spending level (e.g., gold membership). In practice, service companies offer elevated status to some customers who do not meet the required spending level, in an attempt to profit from the profound allure of status. Relying on social psychology research and a mixed-method approach, this study analyzes the loyalty impact of status endowments, defined as awards of elevated status to customers who are not entitled to it. An exploratory qualitative study identifies customer gratitude and customer skepticism as positive and negative mediators, respectively, of customers’ attitudinal responses to endowed status. Quantitative studies—two experimental and one survey—substantiate these bright and dark sides of endowed status. The efficacy of status endowment is contingent on the context. To alleviate the dark-side effect, managers can allow target customers to actively choose whether to be endowed, especially those who are close to achieving the status already, and provide valuable preferential treatment to customers elevated by either endowment or achievement. These insights offer guidelines for whether and how to use status endowment in hierarchical loyalty programs.

Primacy versus recency effects in extended service encounters

Purpose – Customer satisfaction formation represents a dynamic phenomenon, especially in extended service encounters. A single service encounter may have an extended duration and feature several service interactions, which the customer can evaluate independently. This paper aims to offer a dynamic perspective on satisfaction formation, which indicates that what matters is not only the interactions a customer confronts but also when these interactions occur.Design/methodology/approach – Research from social psychology provides a foundation for hypothesizing different effects of positive and negative critical incidents. Negative critical incidents likely are more important for overall satisfaction if they occur at the end of a service encounter. Positive critical incidents should have stronger effects at the beginning. In a 2×2 experimental design, participants considered a five‐day holiday hotel experience.Findings – The data support the predicted dominance of a recency effect for negative critical inciden...

Retourenmanagement zur Steigerung des Kundenwerts

Viele Online-Handler bieten ihren Kunden groszugige Retourenkonditionen an, weil diese das Kaufverhalten der Kunden und damit auch den Kundenwert positiv beeinflussen konnen. Gleichzeitig werden Anbieter durch eine groszugige Retourenpolitik jedoch auch mit einer hohen Anzahl an Retouren und damit einhergehenden Kosten konfrontiert, welche den Kundenwert wiederum negativ beeinflussen. Um einen Weg aus diesem Dilemma zu finden, mussen Online-Handler die Retourenproblematik daher aktiv in ihr Kundenmanagement integrieren. Der folgende Beitrag analysiert verschiedene Masnahmen, die es Online-Handlern ermoglichen Retouren zu senken ohne dabei die Beziehung zum Kunden zu gefahrden. So konnen Anbieter sowohl im Rahmen der strategischen Planung als auch in der operativen Umsetzung des Marketing-Mix Retouren effektiv managen und damit eine Steigerung des Kundenwerts erzielen.

Engineered Customer Referrals: Prevalence and Antecedents

Customer referral programs (CRPs) are a common customer relationship management tool that many large service firms use to reward customers who recommend the firm to their friends or acquaintances. CRPs appear in an array of service industries, including online and mail-order retailers, banking, insurance companies, and fitness clubs. Service providers turn to CRPs because they provide an effective tool for new customer acquisition (Schmitt et al. 2011). As Biyalgorsky et al. (2001) further emphasize, CRPs are also efficient because the service provider only pays the reward if it actually gains the new customer. Given the growing interest in CRPs it is important to investigate their possible unintended consequences. Wirtz and Chew (2002, p. 157–158) expound that “opportunistic behavior might become an issue” for CRPs and call for a clearer understanding of “the potential dangers of design elements of (…) WOM incentive programs”; Schmitt et al. (2011, p. 46) particularly voice concern that “stimulated WOM is prone to abuse by opportunistic referrers.” Potential customers may take advantage of a CRP by engineering an artificial referral situation to obtain the reward (Wirtz and Chew 2002). This means that somebody who has already decided to become a customer of a specific firm learns that it offers a CRP; he or she then searches for a friend or acquaintance who already is a customer of the firm and asks them to “pose” as a referrer. Then, the potential customer purchases from the firm faking the referral situation which invokes a reward that can be shared between the artificial referrer and the potential customer or kept by only one of them. According to anecdotal evidence from the cellular services industry, such opportunistic use of CRPs can account for more than 50 % of all referrals, implying that such programs may not be as effective as often proclaimed. Furthermore, the conclusions derived from sophisticated customer lifetime evaluations that consider referral activity (e.g., Schmitt et al. 2011) may also be inconclusive when a “fake” referrer is assigned value for his or her acquisition of a new customer.

Referral reward programs: New customer acquisition by opportunism?

Referral reward programs are frequently used in services marketing. In referral reward programs, a customer receives a reward for convincing others to become a customer. Numerous large service firms offer rewards to their customers when they recommend a service to their friends and acquaintances. Referral reward programs are so ubiquitous as they are an effective and efficient marketing tool for new customer acquisition (Verlegh, Peters and Pruyn 2003). Ryu and Feick (2007) show that the offered reward can be effective in increasing customers’ word of mouth (WOM). As Biyalgorsky, Gerstner, and Libai (2001) point out referral reward programs are not only effective, but also efficient as the company only pays for the reward if WOM is articulated.

Exploring the Causal Structure Between Perceived Corporate Reputation and Consumer Satisfaction – an Experimental Investigation

Corporate reputation and consumer satisfaction can both be regarded as important drivers of a firm’s competitive advantage (Balmer and Greyser 2003; Fombrun 1996, Fornell 1992). Investigating the antecedents and consequences of these two constructs is of growing interest for academic research and marketing practice alike. Reputation has been shown to be a determinant in purchase decision making (Carmeli and Tishler 2005). Reputation serves as a quality signal that reduces uncertainty of consumers prior to a purchase decision. Building a favorable reputation is therefore deemed an effective way to gain market access and acceptance. After instigating a transaction with a new customer, achieving high rates of customer satisfaction becomes an important goal for firms as satisfaction is viewed as one of the major determinants of customer repurchase and word-of-mouth (Anderson and Sullivan 1993).

How Profound Is the Allure of Endowed Status in Hierarchical Loyalty Programs

Hierarchical loyalty programs are common relationship mar- keting instruments that award elevated status to customers exceeding a certain spending level (e.g., gold membership, platinum customer). In business practice, some companies also offer elevated status to selected customers even if they do not meet the required spending level, in an attempt to profit from the profound allure of status. Relying on social psychology research, this study analyzes the loyalty impact of such a sta- tus endowment. A first experimental study reveals the bright and dark sides of endowed status, with customer gratitude and customer skepti- cism acting as mediating mechanisms. A second experiment delineates that in order to alleviate the dark side, managers should let target cus- tomers make an active choice to be endowed with status and select target customers who are close to achieving that status on their own.