|By PR Newswire||
|April 15, 2014 10:07 AM EDT||
CHICAGO, April 15, 2014 /PRNewswire-USNewswire/ -- Offering important customers added "perks" is widely-thought to increase firm profitability. New research confirms anecdotal reports that doing so may have just the opposite effect.
Customer prioritization programs (e.g., loyalty programs) are becoming ever prevalent. Such programs focus firms' resources on their most important customers and are expected to improve profitability by encouraging customers to purchase more and more frequently from the firm. But why does anecdotal evidence often tell another story?
Hauke Wetzel and Maik Hammerschmidt from the University of Goettingen in Germany and Alex Zablah from George Mason University provide an initial answer to this question in a study published in the March 2014 issue of the American Marketing Association's Journal of Marketing.
The research team finds that while prioritization enhances sales and profits, it also destroys profitability through a disproportionate increase in service costs. These off-setting effects led the research team to dub customer prioritization a "double-edged sword." Wetzel explains that while customer purchase volumes increase in response to the added benefits received, prioritization also signals to customers that they are relatively important to the firm and thus triggers entitled behaviors that result in an "explosion" of customer service costs.
Hammerschmidt and Zablah further explain that the type of benefits a firm provides its important customers determines whether prioritization helps or hurts. If prioritization programs focus on ensuring that the firm's products tightly match a customer's needs, prioritization's undesirable effects are mostly negligible. However, if firms focus on providing customers with symbolic benefits, like labeling them a "VIP customer," entitled behaviors become more prevalent because customers perceive they are somehow superior or more important than other customers. This perceived superiority leads them to demand "royal treatment for value meal prices," adds Wetzel. Contrary to popular belief, the study also reveals that prioritization's harmful effects are accentuated when customers are made aware of the scheme used to award the added benefits because doing so reinforces customers' belief that their loyal behaviors have earned them the right to demand more.
Given their findings, the authors contend that for prioritization programs to maximize profitability, the focus should be on benefits that are largely "silent" about customers' relative status within the firm (e.g., volume discounts). In contrast, prioritization benefits that signal a customer's relative importance to the firm should be used sparingly and only when the goal is to remind customers that they are indeed valued.
About the AMA
About the American Marketing Association:
The American Marketing Association (AMA) is the professional association for individuals and organizations who are leading the practice, teaching, and development of marketing worldwide. Learn more at ama.org.
Contact: Christopher Bartone – 312.542.9029 – [email protected]
SOURCE American Marketing Association
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Apr. 26, 2017 12:00 AM EDT Reads: 574
Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market across the USA and Europe, we work with a variety of customers from emerging startups to Fortune 1000 companies.
Apr. 25, 2017 11:15 PM EDT Reads: 2,288
Apr. 25, 2017 11:00 PM EDT Reads: 424
Financial Technology has become a topic of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 20th Cloud Expo at the Javits Center in New York, June 6-8, 2017, will find fresh new content in a new track called FinTech.
Apr. 25, 2017 11:00 PM EDT Reads: 2,329
@DevOpsSummit at Cloud taking place June 6-8, 2017, at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developm...
Apr. 25, 2017 11:00 PM EDT Reads: 2,173
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
Apr. 25, 2017 10:30 PM EDT Reads: 592
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Apr. 25, 2017 10:30 PM EDT Reads: 7,120
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 20th Cloud Expo, which will take place on June 6-8, 2017 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 add...
Apr. 25, 2017 10:30 PM EDT Reads: 1,854
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
Apr. 25, 2017 10:15 PM EDT Reads: 1,281
SYS-CON Events announced today that Juniper Networks (NYSE: JNPR), an industry leader in automated, scalable and secure networks, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Juniper Networks challenges the status quo with products, solutions and services that transform the economics of networking. The company co-innovates with customers and partners to deliver automated, scalable and secure network...
Apr. 25, 2017 10:15 PM EDT Reads: 1,173
Apr. 25, 2017 10:00 PM EDT Reads: 3,698
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Apr. 25, 2017 09:45 PM EDT Reads: 1,254
Cloud Expo, Inc. has announced today that Aruna Ravichandran, vice president of DevOps Product and Solutions Marketing at CA Technologies, has been named co-conference chair of DevOps at Cloud Expo 2017. The @DevOpsSummit at Cloud Expo New York will take place on June 6-8, 2017, at the Javits Center in New York City, New York, and @DevOpsSummit at Cloud Expo Silicon Valley will take place Oct. 31-Nov. 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Apr. 25, 2017 08:30 PM EDT Reads: 2,495
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Apr. 25, 2017 08:15 PM EDT Reads: 505
Translating agile methodology into real-world best practices within the modern software factory has driven widespread DevOps adoption, yet much work remains to expand workflows and tooling across the enterprise. As models evolve from pockets of experimentation into wholescale organizational reinvention, practitioners find themselves challenged to incorporate the culture and architecture necessary to support DevOps at scale. In his session at @DevOpsSummit at 20th Cloud Expo, Anand Akela, Senior...
Apr. 25, 2017 07:45 PM EDT Reads: 1,755