Mark Colgate

Customer Value Creation: A Practical Framework

Creation of value for customers is a critical task for marketers, particularly when developing new products and services or starting new businesses. This paper presents a new conceptual framework for marketers to ponder when exploring ways to distinguish themselves, in the eyes of the customer, from others in the marketplace. This framework is built on the strengths of existing frameworks. Possible applications of the framework in designing marketing strategy, recognizing new product opportunities, and enhancing product concept specifications are discussed.

The Role of Price Perceptions in an Integrated Model of Behavioral Intentions

Compared to the emphasis that service quality research has received in service marketing, much less work has been done on the role of price perceptions and their effect on customer retention. This article seeks to fill this gap in the literature. The authors build propositions of price’s role vis-à-vis customer value, satisfaction, and behavioral intentions and then test these propositions using empirical data from the banking industry in the United States and New Zealand. Their findings indicate that (a) price perceptions have a stronger influence on customer value perceptions than quality, and (b) price perceptions, when measured on a comparative basis, have a significant direct effect on customer satisfaction and behavioral intentions— over and above their mediated effect through the construct of customer value. These results indicate that price perceptions significantly affect customer retention and suggest that managers may benefit from actively managing consumers’ price perceptions, in addition to consumers’ quality perceptions.

Switching barriers in consumer markets: an investigation of the financial services industry

Much research looks at why customers switch service organizations but there has been less focus on why customers do not switch service organizations, even though they have seriously considered doing so. In light of this, we present an analysis of the literature and develop a list of potential switching barriers. These switching barriers are then empirically tested within two financial services industries. Results from over 400 consumers enable us to ascertain not only the importance of each switching barrier but also to develop a more parsimonious understanding of these barriers, through factor analysis. The results reveal similar patterns in the two industries in respect to switching barriers. The first of the four factors contains reasons related to apathy, the second factor contains negative reasons for customers staying with their current service provider, the third factor relates to relationship variables and the final factor relates to service recovery. Results clearly indicate that the first two factors are far more important than the latter two in terms of why customers stay even when they seriously considered leaving.

Implementing a Customer Relationship Strategy: The Asymmetric Impact of Poor versus Excellent Execution

The benefits of developing customer relationships are well established. However, a well-intentioned relationship marketing strategy may fail because of poor implementation. In this study, the authors look at the effects of implementing a customer relationship strategy. Specifically, they examine the implementation of a personal-banker strategy as a means to developing customer relationships in the retail banking industry. The authors show that an “excellent” personal banker can increase overall customer satisfaction and loyalty compared to customers who do not have a personal banker. However, a poorly performing personal banker can result in lower overall customer satisfaction and loyalty than if no personal banker had been available. Moreover, the effects seem to be asymmetric, with the negative effects of a poor relationship strategy exceeding the positive benefits ofan “excellent” strategy.

An investigation into the switching process in retail banking services

Losing customers can have a detrimental impact on a bank’s market share and profit. Despite these negative effects, few studies have sought to investigate fully the process of defection. Proposes, therefore, to provide a more comprehensive understanding of the process of switching retail banking services by investigating the problems that influence both switching behaviour and complaints made prior to exit. Empirical evidence was drawn from 694 mail surveys collected from banking customers in Australia and New Zealand. The reasons for switching banks were classified into three main problem areas: service failures, pricing problems and denied services. Results indicated that problems with pricing had the most important impact on switching behaviour. In contrast, customers tended to complain more often about service failures prior to exiting the firm. This finding suggests that customers may be staying silent about the problems that are most important in their decision to exit the firm.

Developing a comprehensive picture of service failure

Much attention has been paid recently to the concept of service failure. In light of this, the paper develops a model of the potential outcomes from service failure. Results are utilised from interviews with business banking customers who have recently encountered a service failure. The results show that service recovery is only one of the reasons a customer may stay or exit a service organisation after a service failure. Other factors, such as barriers to exit and loyalty, are just as prevalent in the decision‐making process. A model ofservice failure, which was generated through the results of the research, is presented in the discussion section of the paper.

Relationship quality, on‐line banking and the information technology gap

In a world of escalating competitiveness, information technology (IT), such as online banking, and relationship marketing are becoming increasingly important to marketers. This paper investigates the impact of IT in a relationship marketing context. In particular it focuses on how customers use a combination of IT channels to interact with their financial service provider and how this interaction affects the relationship quality between the customer and the financial service provider. This study provides empirical evidence that indicates that those customers who do not exhibit an “IT gap” have more positive perceptions of their relationship with their financial service provider. These findings suggest that firms that fail to provide channels that their customers seek and value will find it more difficult to forge strong relationships with their customers – a critical condition for success in many of today’s industries.

Retail financial services: transaction to relationship marketing

Presents the findings of a survey carried out among the financial directors of leading retail companies in Australia, Ireland, New Zealand and the UK. The purpose of the survey was to determine those factors that influence the development of financial services within retail organisations. Considers the introduction of financial services, within the context of retailers’ relationships with their customers, and retailers’ ability to build closer relationships with existing and potential customers. Financial service provision is, therefore, considered in the context of the relationship marketing paradigm. Considers the opportunities which financial services provide for retailers to move from a transactional to relationship approach to marketing.

Relationship benefits in an internet environment

Purpose – The notion of relationships has been shown to be a worthwhile strategy in many service industries. This coupled with the rapid development of the internet means that it is now possible (and even beneficial) to implement internet based relationship management programs. Given the importance of this issue this paper seeks to understand the relational benefits that consumers receive in an internet environment relative to the benefits consumers receive in a traditional environment i.e. face‐to‐face.Design/methodology/approach – Results are derived from 15 in‐depth interviews (10 from the internet context and 5 from the traditional context) and over 200 quantitative surveys.Findings – The relationship benefit of “history” appears in both samples which was missing from the original study on relationship benefits. Findings also show that there are differences between the internet group of customers and the traditional customers in respect to the perceived relational benefits. In particular internet cust...

The challenge of relationships in services ‐ a New Zealand study

This paper is concerned with the challenge posed by the management of customer relationships in services. The focus is on banks, although similar service businesses (with long‐term customers) may be expected to encounter like challenges. The relationship approach for businesses is discussed and is judged to be quite fundamental with wide‐ranging implications. The paper considers the appropriateness of the relationship approach for retail banking given the prerequisite conditions suggested by the literature. The personal banker strategy is considered as a means to implementing the relationship approach in retail banking. Empirical findings from a study examining the role of personal bankers in New Zealand are presented. It is concluded that a relationship strategy can be a double‐edged sword: implemented well it can have the desired effects; implemented badly it can have a negative impact that will leave the organization with more problems than if they had done nothing at all.