Evaluating the consequences of abandoning unprofitable customers: A comparison of direct and indirect abandonment strategies

Haenlein, Michael; Kaplan, Andreas

doi:10.1007/s11573-010-0436-5

Cited by 14 publications

(25 citation statements)

References 45 publications

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“…They argue that a company needs to make profit and emphasize that, in a free economy, consumers are also free to switch providers. In addition to Limmer's thesis, current findings from Haenlein and Kaplan (2011) can also be interpreted similarly. As mentioned in Chapter 2.3.6, they show in a US sample that direct abandonment (i.e., customer divestment) leads to highly similar reaction intentions than indirect abandonment (i.e., non-preferred treatment of customers).…”

Section: Discussionsupporting

confidence: 54%

“…Even though the vast majority of the sample is not surprised that telecommunications providers apply abandonment strategies, the authors show that current customers express relatively strong exit intentions and that potential customers express fairness concerns and low purchase intentions. In a second study (Haenlein & Kaplan, 2011)-that does neither assess nor discuss fairness issues-the authors demonstrate, again in a US sample, that consumers' reaction intentions do not differ dependent on the abandonment strategy applied (they distinguish between customer divestment, which is denoted as direct abandonment, and non-preferred treatment, which is denoted as indirect abandonment).…”

Section: Fairness Issuesmentioning

confidence: 92%

“…Accordingly, research on differential customer treatment is rare. Although interest in customer divestment is slightly growing at the moment (e.g., Blömeke & Clement, 2009;Haenlein & Kaplan, 2011), research on the full range of differential customer treatment is still in its infancy. Apart from first theoretical ideas on the fairness of customer prioritization in general (Bechwati & Eshghi, 2005;Boulding, Staelin, Ehret, & Johnston, 2005;Claus, 2006;Hansen, 2000;Hohm, Hansen, & Geisler, 2006) and loyalty programs in particular (Lacey & Sneath, 2006), my research has turned up only a single, recent empirical work that takes the consumer perspective and touches on fairness issues (Haenlein & Kaplan, 2010).…”

Section: List Of Tablesmentioning

confidence: 99%

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Perceived Fairness of Differential Customer Treatment

Mayser

Wangenheim

2012

Journal of Service Research

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Following the principles of relationship marketing, many service providers treat customers differently based on their profitability. We investigate consumers' fairness perceptions of such differential customer treatment in two major service economies, the United States and Germany. Applying the concept of distributive justice to differential customer treatment, we find that consumers' preference for the principle of equity versus the principle of equality predicts fairness perceptions in both countries. We also find that consumers' reactions to nonpreferred treatment are more intense than their reactions to preferred treatment. That is, results indicate that not only does customers' understanding of distributive justice have an influence, but also the principle of loss aversion comes into play when differential customer treatment is examined from the consumers' perspective. We also investigate differences between U.S. and German consumers and find that U.S. consumers perceive differential customer treatment as less unfair. Though rather critical of differential treatment at large, we also find that German consumers report reacting more positively when preferred. Although fairness is an issue, results overall show that most service providers should not refrain from differential customer treatment. Because, generally, consumers do not seek complete equality and like to be preferred, service providers applying differential treatment need to clearly communicate the equity principle and to make sure to treat their best customers preferred-without treating other customers badly. We also recommend including customers' fairness perceptions as a key performance indicator in firms' market research plans and considering regional adjustments rather than standardized practices when applying differential treatment strategies in different countries.

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Section: Discussionsupporting

confidence: 54%

Section: Fairness Issuesmentioning

confidence: 92%

Section: List Of Tablesmentioning

confidence: 99%

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Perceived Fairness of Differential Customer Treatment

Mayser

Wangenheim

2012

Journal of Service Research

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“…A direct abandonment strategy refers to a situation in which a company explicitly expresses the intention to end the relationship with the customer, such as the Sprint Nextel and Filene's Basement cases. On the other hand, a company may choose an indirect abandonment strategy, which terminates the relationship with a customer without explicitly communicating this to the customer (Haenlein and Kaplan 2011). According to Haenlein and Kaplan (2011;, divesting unprofitable or low-value customers can prevent future losses and may improve a company's image among some types of current customers.…”

Section: Customer Value Analysis and Customer Managementmentioning

confidence: 99%

“…On the other hand, the company should consider abandoning those who consume a railway company's resources and damage its performance, who may be labeled as "troublemakers" (Van Raaij 2005;Haenlein and Kaplan 2009;Haenlein and Kaplan 2011). The direct abandonment of troublemakers may cause most companies to hesitate; yet, some indirect abandonment strategies can lead to less severe reactions from customers, such as increasing prices and decreasing service levels (Haenlein and Kaplan 2011;Haenlein and Kaplan 2012).…”

Section: Introductionmentioning

confidence: 99%