Today we identify service articles published in Marketing, Management, Operations, Productions, Information Systems & Practioner-oriented Journals in the last month.
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Nastasoiu, A. and M. Vandenbosch (2019): Competing with loyalty: How to design successful customer loyalty reward programs, Business Horizons, 62(2), pp.207-214
For industries with low switching costs, customer loyalty programs (LPs) have potential to drive differentiation and sustain a competitive advantage. However, incentives provided through LPs also have a potential to escalate into costly price wars. In this article, we discuss how to design successful customer loyalty reward programs that bring value to participants and that cannot be emulated by competitors easily. We focus on three distinct aspects of improvement: personalization, reward types, and additional services. Through personalization, companies can leverage the knowledge they already have on their customers to tailor offers that they find relevant and appealing. For the reward structure, we argue in favor of a certain degree of opacity. We also encourage loyalty programs to consider giveaways that are unique and difficult to imitate and to use all the information they have available to provide rewards that fit with each customers’ idiosyncratic situation or preference. Finally, competitive LPs should look beyond offers and rewards. In addition to purchases, LPs can reward participants for other desirable behaviors; they can also provide additional services that impose minimal costs on firms, but bring value to customers.
Link: http://dx.doi.org/10.1016/j.bushor.2018.11.002 [Google]
Empson, L. (2019): How to Lead Your Fellow Rainmakers, Harvard Business Review, 97(2), pp.114-123
In most corporate settings, leaders are expected to inspire and direct employees—leading is something they do to followers. But in professional service firms, the situation is different. These firms tend to be full of powerful, opinionated experts who prize their autonomy. They don’t easily accept the role of follower—and may be just as unwilling to act as leaders. A leader’s authority is contingent upon their consent, which can be quickly withdrawn. In this context, leadership has to be a collective, not an individual, endeavor. It requires a grasp of three key dynamics: Establishing legitimacy. To be accepted by their peers, leaders have to keep demonstrating an ability to generate revenue. Maneuvering politically. Achieving consensus requires social astuteness and networking skill, and peers must believe the leader is acting in their interests. Negotiating perpetually. To strike a balance between asserting control and giving peers autonomy, leaders must always negotiate. These dynamics are both in flux and interconnected, and leaders have to constantly manage them. INSET: Guiding Principles for Leading in a Professional Service Firm.
Link: http://dx.doi.org/ [Google]
Lee, Z. W. Y., T. K. H. Chan, A. Y.-L. Chong and D. R. Thadani (2019): Customer engagement through omnichannel retailing: The effects of channel integration quality, Industrial Marketing Management, 77(), pp.90-101
While many retailers have turned to omnichannel retailing to remain competitive, engaging customers across channels has become one of the biggest challenges they face. Drawing on social exchange theory, we proposed and tested a research model of customer engagement in the context of omnichannel retailing. Structural equation modeling was employed to test the research model with customers of two emerging omnichannel retailers, Apple (n = 269) and Kroger (n = 221). The results showed that channel integration quality dimensions (including breadth of channel-service choice, transparency of channel-service configuration, content consistency, and process consistency) positively influenced customer engagement which in turn led to positive word-of-mouth and repurchase intention. The research model was examined using both high-involvement products (e.g., Apple) and low-involvement products (e.g., Kroger) despite the varying effects of channel integration quality on customer engagement. This study adds to the growing body of knowledge on customer engagement vis–vis omnichannel retailing and provides retailers with actionable insights into engaging customers across channels. Highlights • Examined the effects of channel integration quality on customer engagement. • Examined the effects of customer engagement on r
Link: http://dx.doi.org/10.1016/j.indmarman.2018.12.004 [Google]
Andreini, D., G. Pedeliento, L. Zarantonello and C. Solerio (2019): Reprint of “A renaissance of brand experience: Advancing the concept through a multi-perspective analysis”, Journal of Business Research, 96(), pp.355-365
Brand experience is one of the most promising concepts to emerge in consumer research over the last decade. However, unlike other brand-related concepts, it has often been considered implicitly, not explicitly, in consumption dynamics. This paper aims to advance knowledge of the concept through an extensive literature review, covering studies that mention the phenomenon of brand experience both explicitly and implicitly (i.e., using relationship theory, service-dominant logic and consumer culture theory). We propose a multi-level framework encompassing the psychological, relational, social and cultural dynamic forces that may enhance the understanding of brand experience. In addressing the micro-, macro- and meso-levels of the proposed framework, we set out a research agenda designed to support a renaissance of brand experience in literature.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.05.047 [Google]
Banik, S., Y. Gao and F. K. Rabbanee (2019): Status demotion in hierarchical loyalty programs and its effects on switching: Identifying mediators and moderators in the Chinese context, Journal of Business Research, 96(), pp.125-134
Hierarchical loyalty programs (HLPs) are widespread across many service industries; however, research on the effects of status demotion in an Eastern cultural context is relatively scant. Based on the psycho-evolutionary theory of emotions, the theory of embarrassment and the literature on losing face, this study explores the effect of status demotion on customers’ intentions to switch service providers in the Chinese context. By doing so, the study examines how feelings of frustration and social discomfort mediate the relationship between status demotion and the switching intentions of Chinese airline HLP members. It further examines how relationship age and gender moderate the link between status demotion and feelings of frustration and social discomfort. Three hundred and forty-seven active members of airline HLPs in China participated in a structured survey. The data collected were then analyzed using partial least squares-based structural equation modeling. The results show that status demotion causes members to experience feelings of frustration and social discomfort, which further lead them to switch service providers. These effects of status demotion on frustration and social discomfort are found to be higher (lower) among the members with longer (shorter) relationship age and male (female) members. The findings of the study have significant theoretical and managerial implications.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.11.010 [Google]
Iglesias, O., S. Markovic and J. Rialp (2019): How does sensory brand experience influence brand equity? Considering the roles of customer satisfaction, customer affective commitment, and employee empathy, Journal of Business Research, 96(), pp.343-354
Building a favorable sensory brand experience is crucial in services settings to strengthen the competitive position of a brand and its equity. However, little empirical research exists in this area. Additionally, and surprisingly, most of the research on service brand experience neglects the importance of employees. This study investigates the effect of sensory brand experience on brand equity in the banking industry, through customer satisfaction and customer affective commitment. It also examines whether employee empathy moderates the impacts of sensory brand experience on customer satisfaction and customer affective commitment. Based on data collected through a panel of 1739 customers, the hypothesized structural model is tested using path analysis. Results show that sensory brand experience has a positive indirect impact on brand equity, through customer satisfaction and customer affective commitment. Customer satisfaction positively influences customer affective commitment, and employee empathy negatively moderates the relationship between sensory brand experience and customer satisfaction.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.05.043 [Google]
Razmdoost, K., L. Alinaghian and H. J. Smyth (2019): Multiplex value cocreation in unique service exchanges, Journal of Business Research, 96(), pp.277-286
While the temporal nature of value cocreation (i.e., the interdependencies between/among past, present, and future value cocreation) is acknowledged in the literature, the processes and mechanisms through which these interdependencies are deliberately managed (i.e., multiplex value cocreation) are not examined. Our study aims to unravel the “black box” of multiplex value cocreation by investigating the processes and mechanisms through which actors manage the temporal nature of value cocreation in unique service exchanges. The research design is a multiple case study comprising four firms engaged in the definition, design, and delivery of mega-infrastructure projects. Our results showed that multiplex value cocreation involves two core processes of institutional work and resource reconfiguration that are reciprocally interrelated, driven by actor motives and conflicts and facilitated by interaction mechanisms. We further propose that emerged institutions and existing previous similar service exchanges may eliminate the need for multiplex value cocreation in routine service exchanges.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.11.046 [Google]
Ho, B. Q. and K. Shirahada (2019): Barriers to Elderly Consumers’ Use of Support Services: Community Support in Japan’s Super-Aged Society, Journal of Nonprofit & Public Sector Marketing, (), pp.1-22
ABSTRACTRural areas need support services to help elderly people sustain their ordinary lives, especially in light of today?s aging societies. In Japan, nonprofit organizations and residents? associations, which are based in local relationships, provide support services aimed at helping the elderly with their daily buying behavior. This study provides a comprehensive understanding of the barriers preventing the use of such support services. We collect 133 respondents from semi-structured interviews through door-to-door visits using snowball sampling to show that there are three such barriers: lifestyle, capability, and trust. Furthermore, we discussed measures to reduce these barriers using our results of correlation analysis and analysis of variance. Our findings have implications for a new direction in social marketing for elderly people. As societies continue to age and highly accessible services become ever more necessary, the insights of our study will be applicable not only in Japan but across the world.
Link: http://dx.doi.org/10.1080/10495142.2019.1589625 [Google]
Seger Guttmann, T. (2019): Customers’ irrational beliefs: Scale development and validation, Journal of Retailing and Consumer Services, 49(), pp.54-66
The service literature, in addressing constructs predicting customer behaviors during service delivery, has neglected the domain of customers’ irrational beliefs (IBs). The Customer Irrational Beliefs Scale (CIBS) was constructed in a mixed-methods process of scale development and validation –– with five separate customer samples, in which the final stage employs the scale to predict customer behaviors of ingratiation, assertiveness, social benefits, commitment, and loyalty. The customer irrational beliefs (CIB) construct comprises three different reflective indicators: Subjective Favoritism, Absolute Fairness, and Reasoning Supremacy. CIB predicted customer behaviors of ingratiation, assertiveness, and customer-related outcomes such as commitment and loyalty. This work extends theory in conceptualizing customer IBs in service interactions. Insights derived from the CIBS can help service employees be cognizant of what thoughts underlie unusual customer behavior with the prospect of dealing more effectively with it.
Link: http://dx.doi.org/10.1016/j.jretconser.2019.03.007 [Google]
Adida, E. and F. Bravo (2019): Contracts for Healthcare Referral Services: Coordination via Outcome-Based Penalty Contracts, Management Science, 65(3), pp.1322-1341
This work focuses on the business-to-business interaction between a service requester and a service provider in a healthcare environment. The requester is the primary caregiver responsible for managing the health of a population of patients. When a patient requires advanced care outside of the requester’s expertise, the requester refers the patient to a provider and pays for the referral services. Treatment may succeed or fail, and in the case of failure, the requester incurs further follow-up costs. The requester may exert preventive effort to reduce the volume of referrals. The provider may exert nonreimbursable effort to reduce the chance of treatment failure. We analyze payment contracts between the two firms. We find that fee-for-service (FFS) induces neither system nor social optimum effort outcomes. However, a penalty contract can generally coordinate the effort decisions with either the system optimum or the social optimum. Furthermore, we find that patients may benefit from having a coordinating contract replace FFS. However, the types of procedures that make a coordinating contract most advantageous for the requester and provider are not necessarily the same as those that make the patients better off than under FFS. Yet, in most cases, the coordinating contract improves social welfare, as compared to FFS, and brings it close to the social optimum. Hence, the requester–provider coordinating contract can be considered as an improvement over FFS for the entire system. The online appendix is available at https://doi.org/10.1287/mnsc.2017.3000. This paper was accepted by Serguei Netessine, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.3000 [Google]
Bimpikis, K. and M. G. Markakis (2019): Learning and Hierarchies in Service Systems, Management Science, 65(3), pp.1268-1285
Motivated by diverse application areas such as healthcare, call centers, and crowdsourcing, we consider the design and operation of service systems that process tasks with types that are ex ante unknown, and employ servers with different skill sets. Our benchmark model involves two types of tasks, Easy and Hard, and servers that are either Junior or Senior in their abilities. The service provider determines a resource allocation policy, i.e., how to assign tasks to servers over time, with the goal of maximizing the system’s long-term throughput. Information about a task’s type can only be obtained while serving it. In particular, the more time a Junior server spends on a task without service completion, the higher her belief that the task is Hard and thus needs to be rerouted to a Senior server. This interplay between service time and task-type uncertainty implies that the system’s resource allocation policy and staffing levels implicitly determine how the provider prioritizes between learning and actually serving. We show that the performance loss due to the uncertainty in task types can be significant and, interestingly, that the system’s stability region is largely dependent on the rate at which information about tasks’ types is generated. Furthermore, we consider endogenizing the servers’ capabilities: assuming that training is costly, we explore the problem of jointly optimizing over the training levels of the system’s server pools, the staffing levels, and the resource allocation policy. We find that among optimal designs there always exists one with a “hierarchical” structure, where all tasks are initially routed to the least skilled servers and then progressively move to more skilled ones, if necessary. Comparative statics indicate that uncertainty in task types leads to significantly higher staffing cost and less specialized server pools. This paper was accepted by Serguei Netessine, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2976 [Google]
Chan, T. H., F. de Véricourt and O. Besbes (2019): Contracting in Medical Equipment Maintenance Services: An Empirical Investigation, Management Science, 65(3), pp.1136-1150
Maintenance service plans (MSPs) are contracts for the provision of maintenance by a service provider to an equipment operator. These plans can have different payment structures and risk allocations, which induce various types of incentives for agents in the service chain. How do such structures affect service performance and service chain value? We provide an empirical answer to this question by using unique panel data covering the sales and service records of more than 700 diagnostic body scanners. We exploit the presence of a standard warranty period and employ a matching approach to isolate the incentive effects of MSPs from the confounding effects of endogenous contract selection. We find that moving the equipment operator from a basic, pay-per-service plan to a fixed-fee, full-protection plan not only reduces reliability but also increases equipment service costs. Furthermore, that increase is driven by both the operator and the service provider. Our results indicate that incentive effects arising from MSPs leads to losses in service chain value, and we provide the first evidence that a basic pay-per-service plan—under which risk of equipment failure is borne by the operator—can improve performance and reduce costs. This paper was accepted by Gad Allon, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2993 [Google]
Rajan, B., T. Tezcan and A. Seidmann (2019): Service Systems with Heterogeneous Customers: Investigating the Effect of Telemedicine on Chronic Care, Management Science, 65(3), pp.1236-1267
Medical specialists treating chronic conditions typically face a heterogeneous set of patients. Such heterogeneity arises because of differences in medical conditions as well as the travel burden each patient faces to visit the clinic periodically. Given this heterogeneity, we compare the strategic behavior of revenue-maximizing and welfare-maximizing specialists and prove that the former will serve a smaller patient population, spend more time with the patients, and have shorter waiting times. We also analyze the impact of telemedicine technology on patient utility and the specialists’ operating decisions. We consider both the case when specialists can freely set their own fee for service and the case when fees are set exogenously by a third-party payer. We prove that with the introduction of telemedicine, the specialists become more productive and the overall social welfare increases, although some patients, unexpectedly, will be worse off. Our analytical results lead to some important policy implications for facilitating the further deployment of telemedicine in the care of chronically ill patients. This paper was accepted by Serguei Netessine, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2979 [Google]
Wu, C., A. Bassamboo and O. Perry (2019): Service System with Dependent Service and Patience Times, Management Science, 65(3), pp.1151-1172
Motivated by recent empirical evidence, we consider a large service system in which the patience time of each customer depends on his service requirement. Our goal is to study the impact of such dependence on key performance measures, such as expected waiting times and average queue length, as well as on optimal capacity decisions. Since the dependence structure renders exact analysis intractable, we employ a stationary fluid approximation that is based on the entire joint distribution of the service and patience times. Our results show that even moderate dependence has significant impacts on system performance, so considering the patience and service times to be independent when they are in fact dependent is futile. We further demonstrate that Pearson’s correlation coefficient, which is commonly used to measure and rank dependence, is an insufficient statistic, and that the entire joint distribution is required for comparative statics. Thus, we propose a novel framework, incorporating the fluid model with bivariate dependence orders and copulas, to study the impacts of the aforementioned dependence. We then demonstrate how that framework can be applied to facilitate revenue optimization when staffing and abandonment costs are incurred. Finally, the effectiveness of the fluid-based approximations and optimal-staffing prescriptions is demonstrated via simulations. This paper was accepted by Noah Gans, stochastic models and simulation.
Link: http://dx.doi.org/10.1287/mnsc.2017.2983 [Google]
Feng, T., Z. J. Ren and F. Zhang (2019): Service Outsourcing: Capacity, Quality and Correlated Costs, Production & Operations Management, 28(3), pp.682-699
This paper studies how to design service outsourcing contracts to ensure fast, quality services from an independent service provider. The outsourcer does not have perfect information about the service provider’s capacity cost (i.e., cost of providing fast service) and quality cost (i.e., cost of achieving a high quality level). Moreover, the two unknown costs may be positively, or negatively, correlated with each other. We solve for the outsourcer’s optimal outsourcing contract, and show that the structure of the optimal contract depends on the relationship between the costs. Specifically, we highlight the following observations when the two costs are negatively correlated: First, under certain conditions, the outsourcer may be able to squeeze the supplier’s profit (information rent) to zero for an intermediate range of cost realizations; second, it is possible that the service supply chain is coordinated by using the outsourcer’s optimal contract. We then examine the performance of two classes of commonly observed contracts that are relatively simple to implement. It has been found that these simple contracts generally perform well when the costs are positively correlated, but they could perform much worse when the costs are negatively correlated. Our results therefore caution outsourcing companies that the potential trade‐off between capacity cost and quality cost may require a careful design of outsourcing contracts.
Link: http://dx.doi.org/10.1111/poms.12949 [Google]
