Customer-Firm Interactions and the Path to Profitability

Abstract

This study investigates a chain of effects to understand the causal path from customer informational inquiries (CIIs) and firm-initiated contacts (FICs) to customer profitability. Drawing on social exchange theory, our framework identifies a set of attitudinal (perceived relationship investment and relationship quality), behavioral (customer cross-buy and service usage), and financial (customer profitability) consequences of CIIs and FICs and also explores the extent to which customer-perceived financial risk and customer involvement shape attitudinal reactions to CIIs and FICs. Using longitudinal data for a sample of 1,990 customers measured in four different periods, the framework is tested in financial services by applying seemingly unrelated regression techniques. Our results reveal that FICs and CIIs are a particularly valuable tool for strengthening the relationship with customers with a low level of involvement but high perception of financial services risk. For highly involved customers, FICs and CIIs are not very effective; CIIs can even backfire if the customer also perceives the risk to be low. Our results highlight the importance of market segmentation for marketers to more effectively manage when and to whom they should target marketing activities (FICs) and steer CIIs.

Customer-based brand equity and customer engagement in experiential services: insights from an emerging economy

“…Creating lasting consumer-bonds, then, is of the essence-becoming an indispensable aspiration for service providers. Today's consumers play a much more active role in information/recommendation-seeking and decision-making processes (Cambra-Fierro et al 2018a). Many are even willing to co-create throughout design and service delivery processes (Lee 2019;Cambra-Fierro et al 2018b).…”

Channel Habits and the Development of Successful Customer-Firm Relationships in Services

“…First, we developed our research in the context of the financial services industry, and the habit development under study is tied to the channels of a specific provider. This industry has specific characteristics, as it requires a high degree of customer involvement for financial products with a high level of perceived risk (such as mortgages, stocks, savings plans, and pension plans; Cambra-Fierro et al 2018). This contrasts with other recurrent products and services with very low risk (such as withdrawal of funds and checking an account balance).…”

“…This contrasts with other recurrent products and services with very low risk (such as withdrawal of funds and checking an account balance). In the financial services industry, risk perceptions result in anxiety and stimulate the development of risk reduction strategies, such as searching for information, which consequently require a higher level of customer involvement (Cambra-Fierro et al 2018; Shun-Yao and Ching-Nan 2015). Hence, it would be of value for further research to replicate our model in other contexts to compare the results and to extract solid conclusions for the literature.…”

Assessing the Effects of Service Variability on Consumer Confidence and Behavior

“…Without accounting for these effects, existing models of service decision making may overstate the importance of cross-sectional evaluations. As a result, we encourage more research that leverage data across a range of transactions or time periods to better understand the dynamics of service relationships (e.g., Cambra-Fierro et al 2018).…”