Predicting customer retention in discrete and continuous services

Chapter
Part of the FOM-Edition book series (FOMEDITION)

Abstract

Optimising customer loyalty is critical for any organisation. However, achieving customer loyalty is challenging, especially in service industries. This chapter discusses customer loyalty, the challenges of achieving customer loyalty in service industries, and the different challenges to achieving loyalty in continuous (membership-based) service providers compared to discrete service providers. Finally, a step-by-step risk profiling approach is presented, based on a mixed-method research approach, to help service organisations predict the likelihood of loyalty and implement targeted interventions to customer segments most at risk of defection.

Keywords

Income Marketing Expense Bove Salon 

Bibliography

References

  1. Akinci, S., Kaynak, E., Atilgan, E., & Aksoy, S. (2007). Where does the Logistic Regression Analysis stand in Marketing Literature? A Comparison of the Market Positioning of Prominent Marketing Journals. European Journal of Marketing, 41(5/6), 537–567.CrossRefGoogle Scholar
  2. Anderson, E., & Weitz, B. (1989). Determinants of Continuity in Conventional Industrial Channel Dyads. Marketing Science, 8(4), 310.CrossRefGoogle Scholar
  3. Bansal, H. S., Taylor, S. F., & James, S. T. (2005). Migrating to new service providers: toward a unifying framework of consumers switching behaviours. Journal of the Academy of Marketing Science, 3(1), 96–115.CrossRefGoogle Scholar
  4. Bhattacharya, C. B. (1998). When customers are members: Customer retention in paid membership contexts. Journal of the Academy of Marketing Science, 26(1), 31–44.CrossRefGoogle Scholar
  5. Bhattacharya, C. B., Rao, H., & Glynn, M. A. (1995). Understanding the bond of identification: An investigation of its correlates among art museum members. Journal of Marketing, 59(4), 46–57.CrossRefGoogle Scholar
  6. Bolton, R. N. (1998). A Dynamic Model of the Duration of the Customers Relationship with a Continuous Service Provider: The Role of Satisfaction. Marketing Science, 17(1), 45–65.CrossRefGoogle Scholar
  7. Bolton, R. N., Lemon, K. N., & Verhoef, P. C. (2004). The Theoretical Underpinnings of Customer Asset Management: A Framework and Propositions for Future Research. Journal of the Academy of Marketing Science, 32(3), 271–292.CrossRefGoogle Scholar
  8. Bove, L. L., & Johnson, L. W. (2009). Does true personal or service loyalty last? A longitudinal study. Journal of Services Marketing, 23(3), 187–194.CrossRefGoogle Scholar
  9. Brown, T. J., Barry, T. E., Dacin, P. A., & Gunst, R. F. (2005). Spreading the Word: Investigating Antecedents of Consumers’ Positive Word-of-Mouth Intentions and Behaviors in a Retailing Context. Journal of the Academy of Marketing Science, 33(2), 123–138.CrossRefGoogle Scholar
  10. Bryman, A. (2006). Integrating quantitative and qualitative research: how is it done? Qualitative Research, 6, 97–113.CrossRefGoogle Scholar
  11. Bryman, A. (2008). Social Research Methods (3rd edn.). United Kingdom: Oxford University Press.Google Scholar
  12. Bult, J. R., & Wansbeek, T. (1995). Optimal selection for direct mail. Marketing Science, 14(4), 378–394.CrossRefGoogle Scholar
  13. Büttgen, M., Schumann, J. H., & Ates, Z. (2012). Service Locus of Control and Customer Coproduction: The Role of Prior Service Experience and Organizational Socialization. Journal of Service Research, 15(2), 166–181.CrossRefGoogle Scholar
  14. Cachon, G., & Feldman, P. (2011). Pricing services subject to congestion: Charge per-use fees or sell subscriptions? Manufacturing and Service Operations Management, 13(2), 244–260.CrossRefGoogle Scholar
  15. Coelho, P. S., & Henseler, J. (2012). Creating customer loyalty through service customization. European Journal of Marketing, 46(3/4), 331–333.CrossRefGoogle Scholar
  16. De Matos, C. A., & Rossi, C. A. V. (2008). Word-of-Mouth Communications in Marketing: A Meta-Analytic Review of the Antecedents and Moderators. Journal of the Academy of Marketing Science, 36(4), 578–596.CrossRefGoogle Scholar
  17. DeWitt, T., Nguyen, D. T., & Marshall, R. (2008). Exploring customer loyalty following service recovery. Journal of Service Research, 10, 269–281.CrossRefGoogle Scholar
  18. Dorsch, M. J., Grove, S. J., & Darden, W. R. (2000). Consumer intensions to use a service category. Journal of the Services Marketing, 14(2), 92–117.Google Scholar
  19. Evanschitzky, H., & Wunderlich, M. (2006). An examination of moderator effects: the four stage loyalty model. Journal of Service Research, 8(4), 330–345.CrossRefGoogle Scholar
  20. Flanagan, J. C. (1954). The Critical Incident Technique. Psychological Bulletin, 51(4), 327–358.CrossRefGoogle Scholar
  21. Gonçalves, H. M., & Sampaio, P. (2012). The customer satisfaction-customer loyalty relationship: Reassessing customer and relational characteristics moderating effects. Management Decision, 50(9), 1509–1526.CrossRefGoogle Scholar
  22. Gruen, T. W., Summers, J. O., & Acito, F. (2000). Relationship marketing activities commitment and membership behaviours in professional associations. Journal of Marketing, 64(3), 34–49.CrossRefGoogle Scholar
  23. Guest, G., Bunce, A., & Johnson, L. (2006). How Many Interviews Are Enough? An Experiment with Data Saturation and Variability. Field Methods, 18(1), 59–82.CrossRefGoogle Scholar
  24. Hajipour, B., Bavarsad, B., & Asadi, Z. (2013). Investigating the Service Friendship Communicational Skills and Personality Traits in High-Contact Service. Journal of Management Research, 5(1), 233–249.CrossRefGoogle Scholar
  25. Han, X., Kwortnik, R., & Wang, C. (2008). Service Loyalty: An integrated model and examination across service contexts. Journal of Service Research, 11(1), 22–42.Google Scholar
  26. Jones, T. O., & Sasser, E. W. (1995). Why Satisfied Customers Defect. Harvard Business Review, 73, 88–99.Google Scholar
  27. Jones, T., & Taylor, S. F. (2007). The Conceptual Domain of Service Loyalty: How Many Dimensions? Journal of Services Marketing, 26(1), 36–51.CrossRefGoogle Scholar
  28. Kinard, B. R., & Capella, M. L. (2006). Relationship marketing: the influence of consumer involvement on perceived service benefits. Journal of Service Marketing, 20(6), 359–368.CrossRefGoogle Scholar
  29. Kvale, S. (1996). InterViews: An Introduction to Qualitative Research Interviews. California: Sage Publications.Google Scholar
  30. La, S., & Choi, B. (2012). The role of customer affection and trust in loyalty restoration after service failure and recovery. The Service Industries Journal, 32(1), 105–125.CrossRefGoogle Scholar
  31. Lee, M., & Cunningham, L. F. (2001). A cost/benefit approach to understanding service loyalty. Journal of Services Marketing, 15(2), 113–130.CrossRefGoogle Scholar
  32. Lengnick-Hall, C. A., Claycomb, C., & Inks, L. W. (2000). From recipient to contributor: examining customer roles and experienced outcomes. European Journal of Marketing, 34, 359–383.CrossRefGoogle Scholar
  33. Liljander, V., & Strandvik, T. (1995). The Nature of Customer Relationships in Services. In T. A. Swartz, D. E. Bowen, & S. W. Brown (Eds.), Advances in Services Marketing and Management. London.: JAI Press Inc.Google Scholar
  34. Lovelock, C., & Gummesson, E. (2004). Whither Services Marketing? In Search of a New Paradigm and Fresh Perspectives. Journal of Service Research, 7, 20–41.CrossRefGoogle Scholar
  35. Mechinda, P., & Patterson, G. P. (2011). The impact of service climate and service provider personality on employees customer-oriented behavior in a high-contact setting. Journal of Services Marketing, 25(2), 101–113.CrossRefGoogle Scholar
  36. Mittal, V., & Kamakura, W. A. (2001). Satisfaction repurchase intent and repurchase behavior: Investigating the moderating effect of customer characteristics. Journal of Marketing Research, 38(1), 131–142.CrossRefGoogle Scholar
  37. Oliver, R. L. (1980). A Cognitive Model of the Antecedents and Consequences of Satisfaction Decisions. Journal of Marketing Research, 17, 460–469.CrossRefGoogle Scholar
  38. Peduzzi, P., Concato, J., Kemper, E., Holford, T. R., & Feinstein, A. (1996). A simulation of the number of events per variable in logistic regression analysis. Journal of Clinical Epidemiology, 49(12), 1373–1379.CrossRefGoogle Scholar
  39. Reichheld, F. (1996). The Loyalty Effect. Boston: Harvard Business School Press.Google Scholar
  40. Reichheld, F. (2003). The one number you need to grow. Harvard Business Review, 81, 46–54.Google Scholar
  41. Reichheld, F., & Kenny, D. (1990). The Hidden Advantages of Customer retention. Journal of Retail Banking, XII(4), 19–23.Google Scholar
  42. Reichheld, F., & Sasser, W. (1990). Zero Defections: Quality Comes to Service. Harvard Business Review, 68, 105–111.Google Scholar
  43. Reinartz, W. J., & Kumar, V. (2000). On the profitability of long-life customers in a noncrontactual setting: An empirical investigation and implications for marketing. Journal of Marketing, 64(4), 17–35.CrossRefGoogle Scholar
  44. Ritchie, J., Spencer, L., & O’Connor, W. (2003). Carrying out qualitative analysis. In J. Ritchie, & J. Lewis (Eds.), Qualitative research practice: A guide for social science students and researchers. London.: Sage.Google Scholar
  45. Roos, I. (1999). Switching processes in customer relationships. Journal of Service Research, 2(1), 68–85.CrossRefGoogle Scholar
  46. Schmitt, P., Skiera, B., & Van den Bulte, C. (2011). Referral Programs and Customer Value. Journal of Marketing, 75, 46–59.CrossRefGoogle Scholar
  47. Tabachnick, B. G., & Fidell, L. S. (2007). Using multivariate statistics. Boston.: Allyn Bacon.Google Scholar
  48. Vargo, S. L., & Lusch, R. F. (2004). The Four services marketing myths: remnants from a manufacturing model. Journal of Service Research, 6, 324–335.CrossRefGoogle Scholar
  49. Verhoef, P. C. (2003). Understanding the Effect of Customer Relationship Management Efforts on Customer Retention and Customer Share Development. Journal of Marketing, 67(4), 30–45.CrossRefGoogle Scholar
  50. Verhoef, P. C., & Donkers, B. (2005). The Effect of Acquisition Channels on Customer Loyalty and Cross-Buying. Journal of Interactive Marketing, 19(2), 31–43.CrossRefGoogle Scholar
  51. Villanueva, J., Yoo, S., & Hanssens, D. M. (2008). The Impact of Marketing-Induced Versus Word-of-Mouth Customer Acquisition on Customer Equity Growth. Journal of Marketing Research, 45, 48–59.CrossRefGoogle Scholar
  52. Vittinghoff, E., & McCulloch, C. E. (2007). Relaxing the rule of ten events per variable in logistic and cox regression. American Journal of Epidemiology, 165, 710–718.CrossRefGoogle Scholar
  53. Wang, C. Y. (2010). Service quality perceived value corporate image and customer loyalty in the context of varying levels of switching costs. Psychology and Marketing, 27(3), 252–262.CrossRefGoogle Scholar
  54. Ward, T., & Dagger, T. S. (2007). The complexity of relationship marketing for service Customers. Journal of Services Marketing, 21(4), 281–290.CrossRefGoogle Scholar
  55. Zeithaml, V. A., Parasuraman, A., & Berry, L. L. (1985). Problems and Strategies in Services Marketing. Journal of Marketing, 49(2), 33–46.CrossRefGoogle Scholar

Further Reading

  1. Berry, L. L., Zeithaml, V. A., & Parasuraman, A. (1985). Quality counts in services too. Business Horizons, 28(3), 44–52.Google Scholar

Copyright information

© Springer Fachmedien Wiesbaden 2015

Authors and Affiliations

  1. 1.University of Worcester, Worcester Business SchoolWorcesterUK

Personalised recommendations