Presentation on theme: "Author: V. Kumar, Lerzan Aksoy,"— Presentation transcript:
1 Undervalued or Overvalued Customers: Capturing Total Customer Engagement Value Author: V. Kumar, Lerzan Aksoy,Bas Donkers, Rajkumar Venkatesan, Thorsten Wiesel and Sebastian TillmannsResource :Journal of Service Research, 2010Teacher– 苑守慈Presenter – Allan WuUndervalued or Overvalued Customers: Capturing Total Customer Engagement Value
2 Agenda Introduction Conceptualizing CEV CEV Components Metrics for the CEV ComponentsResearch PropositionsMaximizing CEVConclusion
3 IntroductionEngagement is a customer’s behavioral manifestation toward a brand or firm and that it results from motivational drivers.CEV offers a more complete evaluation of how much an individual customer is contributing to the firm in multiple ways.Customer Behavior / Attitudes / Network Metrics?
5 CEV Components CLV customer lifetime value CRV customer referral value Customer purchasing behavior, whether it be repeat purchases or additional purchases through up-selling and cross-sellingCRV customer referral valueCustomer referral behavior as it relates to the acquisition of new customers through a firm initiated and incentivized formal referral programsCIV customer influencer valueCustomer influencer behavior through customers’ influence on other acquired customers as well as on prospectsCKV customer knowledge valueCustomer knowledge behavior via feedback provided to the firm for ideas for innovations and improvements, and contributing to knowledge developmentDETAILCLV ). CLV is defined as the present valueof future profits generated from a customer over his or her life ofbusiness with the firm. It takes into account the total financialcontribution of transactions CLV provides important managerial insights.CRVAn important component of maximizing the value of a customer base is to determine how much of each customer’s valuestems from his or her referrals of new customersreferral programs reward existing customers and build the customer base, firms use them to encourage customers to makerecommendations to othersCIVIn many product categories, information sharing, WOM, interaction, and assistance from other customers post acquisition ) can significantly affect others’ behavior through. CRV focuses solely on turning prospects into customersthrough a formal incentivized referral program, while CIVfocuses on both prospects as well as existing customersCKVthe meaning of value and the process of value creationare rapidly shifting to more personalized customer experiences,service provision, intangible resources, co-creation and relationshipsCustomers can add value to the company by helping understand customer preferences and participating in the knowledgedevelopment processcustomer participation as an information resource and customer participation as a codevelopernew product development process are commonly seen in business-to-businessbusiness-to-consumer sector has taken the lead in codeveloping products and services with consumers
6 Conceptualizing CEV Firm ILLUSTRATE framework for connecting firm and competitor actions to intermediate customer mind-set and behavioral metrics that ultimately result inthe four components of CEV
7 Metrics for the CEV Components 1CLV, has been extensively investigated in the marketing literature and there is a wide body ofresearch that exists to measure, calculate, and monitor CLVCRV, captures the value of howcustomer referral programs can improve the profitability of thecustomer base by cost-effectively acquiring quality prospects,measure of the number of connections and their levelof interaction could, therefore, provide valuable input for CRVcalculationsA measure of the number of connections and their levelcalculations.influence the acquisition of other profitable customersTracking a customer’s product or service expertise for example (which is correlated with their CLV) can bevaluable in assessing CKVwillingness to provide feedback is an attitudinal factor that can lead to higher CKVsharing their reasons forleaving, allowing the firm to identify service improvementopportunities and increase its capability to detect at-risk customersthe level of connectedness of customers to otherprospects and customers can provide the capability to betterassimilate information from their networks and hence themarket when providing feedback, thereby increasing theirknowledge value to the firm.
8 Conceptualizing CEVIt is important to recognize here that the proposed metricsthemselves can influence each other
9 Research Propositions When a prospect receives a referral from an existing customer,the impact of the referral will depend on the level of experienceof the referring customerFinally, highly satisfied customers have higherCLVs (Anderson and Mittal 2004) and also refer other customersmore frequentlyIt is important to note, however, that Kumar, Petersen, andLeone (2010) show that CLV and CRV exhibit an inverted Urelationship. This primarily occurs because very high CLV customers are not as interested in making incentive-based referralsas medium CLV customers.high CLVimplies high credibility, making influencers more powerful.More experienced customers might also be better able toarticulate their ideas (Alba and Hutchinson 1987), makingthem more influential.Although credibility (purchase history, experience with a product) is an important precursor to how influential an individualis, it is important to note that credibility can be establishedwithout purchase historymisattribution錯誤歸因
11 Maximizing CEVAt the most basic level, a customer’s CEV can be maximized when each of its four components (CLV, CRV,CIV, and CKV) is individually maximized.While CLV can be increased by more purchases by the customer over time,CRV increases with current customers referring new customers.Encouraging and strengthening WOM communication is important to build CIVIn addition to utilizing the Internet, firms should take into account the variety of motivations customers have for providing feedback.Maximizing CEVEACH DETAILCLVWhile CLV can be increased by more purchases by thecustomer over timeBy enhancing customer satisfaction and creatingincentives for customers to exhibit the specific behaviors,companies can increase the CRV of their customersReferral reward programsencouraging customers to purchase fromthe physical store, the Internet, and the store catalog shouldincrease their CRV since multichannel shoppers are morelikely to make referralsthe more connections a customer has with others, the moreinfluential he or she has the potential to beVirtual communities are one way for customers to communicate with one another and hence influenceFirms can utilize the inherent quality many individuals possessto be ‘‘trendsetters’’ to motivate them to be opinion leadersThe Internet can also be an excellent means by which tomaximize CKVThe customer needs to be given theopportunity to easily contact the firm to share his or her ideasor provide feedbacksome customers may inherently bereward seeking. They are extrinsically motivated and requiresome kind of compensation from the firm for their ideas andfeedback. Firms can offer to buy ideas or can offer thesecustomers a cut of the profitssponsoring competitions
12 ConclusionAlthough creating an environment where customers are more engaged with the company may require initial investment, it has the potential to generate higher profits in the long run through the creation of CEV.These four dimensions together constitute a customer’s CEV.Researchers and practitioners have proposed numerousways of operationalizing CLV (e.g., Rust, Lemon, andZeithaml 2004; Venkatesan and Kumar 2004; Wiesel, Skiera,and Villanueva 2008). Recently, studies have emerged thatfocus on ways to conceptualize and measure CRV (Kumar,Petersen, and Leone 2007, 2010). However, to the best of ourknowledge, CKV and CIV have not been in the focus of anypublished research yet