Learn the Difference between

(1)

Learn the Difference between

Active and Passive Customers

-Communicate your Products and Services Successfully

Inger Roos

Associate Professor

(2)

The knowledge of what actually happens when customers

change from your business

to other, or another type of service provider

is important knowledge

(3)

(4)

The insight

that

understanding customer relationship

is important has existed for a long time in business….

…but it has been difficult to translate the

understanding of the specific features and functions into

Communications

is such a function

understanding of the specific features and functions into

daily practices in companies

(5)

Customer-relationship knowledge

Important!

Customer-relationship knowledge

Communication with customers

Important!

These two has to be

combined in order

to influence loyalty!

(6)

Why the result is different if you relate the customer

Will you switch to a competitor rather than to

Why the result is different if you relate the customer

experiences to actual behavior?, e.g:

Customer-relationship

knowledge based in

actual switching

(actual behavior)

Will you switch to a competitor rather than to

stay AT MY BUSINESS if the price level goes up?

(7)

The difference is due to customer relationship

is a process

You have no grasp of a process

if not all parts are related to the same thing

eg. actual behavior (changing behavior)

(8)

The implication of the differences between active and passive

customers is that the company must obtain information from

Conscious and

unconscious thought

processes

Process and

relevance

customers is that the company must obtain information from

customers that is relevant to understanding

Understanding a switching process from the

By knowing

unconscious thought

processes, we can

design communication

that reaches all

reality that all factors in the customer relationship is not

equally important for loyalty - is the relevant information

that reaches all

customers - active and

passive

(9)

Conscious and unconscious thought processes

influence actual behavior differently

The characters of active and passive

customers influence loyalty differently

(10)

Knowing the difference

between active and passive customers is thus important

1. A passive customer is

approached by a

competitor and make

unplanned switching

2. A passive customer has

1. An active customer has

planned the switching

2. An active customer is

looking for information

and factual arguments in

2. A passive customer has

very little knowledge of

their service provider and

competing service and

products

and factual arguments in

the comparison of

(11)

An important part of understanding

is the recognition of "different pictures" between

company and customer (blind spot)

Therefore, the

difference will be

Perceptions

of actor

₂

Perceptions

of actor

₁

difference will be

about how to get

information!

Asymmetry caused by diverging perceptions

between relationship actors

(12)

Blind spots in customer

relationships

Some suggest that the opposite eye compensates for the

(

Yes, I googled it…

)

Some suggest that the opposite eye compensates for the

missing visual information. One of the most commonly

accepted theories is that the brain actually fills in the

(13)

How do we get information

• related to actual behavior and thereby has

• influence on loyalty?

(14)

Method

SPAT

-Actual behavior

Pusher, Swayer , Puller

Critical Contact Critical Contact Critical Contact Critical Contact Critical Contact _Contact Process Competitor Trigger Contact Outcome Situational Influential Reactional

Pusher, Swayer , Puller

Critical Contact Critical Contact Critical Contact Critical Contact Critical Contact _Contact Process Competitor Trigger Contact Outcome Situational Influential Reactional Situational Influential Reactional

-Actual behavior

-Triggers determine

the stability of the

outcome

-Switching

determinants less

important for

switching

Switching Path Switching Path

(15)

Changes in the customers’ lives

-economy

-family

Situational

Influential

Reactional

-family

Market effect

-active

-passive

Disturbances in the interaction

between customers and companies

(16)

Improvements when applying the

SPAT - logic

SPAT- (Switching Path Analysis Technique)

SPAT - logic

1. Loyalty effect embedded in the results

2. Based on the loyalty effect:

• New studies can be initiated

(17)

Background – theoretical steps

Variant of the CIT-technique labeled

SPAT (Switching Path Analysis Technique)

Customer Relationships

Triggers (Sensitivity Factors)

Empirical

examples of the

development of

SPAT

1.Situational

2.Influential

3.Reactional

(18)

This knowledge is based on

15 years of research work and

with 25 years of practical

experience of customer relationships in business

(owner of supermarket (“K-kauppias”, ICA köpman)

(19)

SPAT

Switching Path Analysis Technique

-A method for defining company-specific customer relationships

25 years of experience from

retailing, owning a supermarket

Developed by

Inger Roos

13 years of experience from

research in marketing

–

Customer relationships

(20)

The 50 Most-Frequently Cited Articles

in Journal of Service Research as of August 1, 2011 -- updated monthly

Most-cited rankings are recalculated at the beginning of the month. Most-cited rankings are recalculated at the beginning of the month.

Rankings are based on citations to articles on this journal site from articles in HighWire-hosted journals.

21. Timothy L. Keiningham, Tiffany Perkins-Munn, Heather Evans

The Impact of Customer Satisfaction on Share-of-Wallet in a Business-to-Business Environment

Journal of Service Research Aug 01, 2003; 6: 37-50. (In "Article") [Abstract] [PDF]

22. Anna S. Mattila, Cathy A. Enz

The Role of Emotions in Service Encounters Journal of Service Research May 01, 2002; 4: 268-277. (In "Article") [Abstract] [PDF]

23. Aimee L. Drolet, Donald G. Morrison

Do We Really Need Multiple-Item Measures in Service Research? Journal of Service Research Feb 01, 2001; 3: 196-204. (In "Article") [Abstract] [PDF]

24. Dwayne D. Gremler

The Critical Incident Technique in Service Research Journal of Service Research Aug 01, 2004; 7: 65-89.

25!

The Critical Incident Technique in Service Research Journal of Service Research Aug 01, 2004; 7: 65-89. (In "Article") [Abstract] [PDF]

25. Inger Roos

Switching Processes in Customer Relationships Journal

of

Service Research Aug 01, 1999; 2: 68-85. (In "Article") [Abstract] [PDF]

(21)

Procedure background

1. The development regarding a process (dynamic) variant of the CIT-technique labeled

SPAT (Switching Path Analysis Technique, Roos 1999) continued over many years

A process method

SPAT

-from 1996 and showed gradually interesting results

regarding category characteristics of customer relationships. The main categories, triggers

possessed qualities to inform about the stability of the outcome state in

customer relationships

2. The results were found to fill a gap in the Fishbein and Ajzen

(1975) model The theory of reasoned action (TRA).

-and an identified

gap in the (F&A

1975) model TRA

(1975) model The theory of reasoned action (TRA).

3. The gap was identified by Sheppard, Hartwick and Warshaw (1988) who pointed

to the importance of anchoring the thought processes, generally, in actual

(22)

Case presentation –

(23)

Setting Data collection Trigger Switching determinant Development level First case: Supermarket 76 interviews 84 switching stories 27 Situational triggers 36 Influential triggers 21 Reactional triggers

Range of goods, Location, Price, Competitor,

Merchandise, Design, Co-customer, Failure of system, Policy, Variation, Product mix, Service policy, Failure of service, Atmosphere, Personnel, Habit, Queuing.

The difference between triggers and switching determinants was established Second case: 4 different settings

Banking 27 interviews 20 Situational 8 Loan conditions; 5 Service; Confirmation of the

Empirical demonstration of

the results of SPAT

applications

Banking 27 interviews 20 Situational 4 Reactional 3 Influential

8 Loan conditions; 5 Service; 4 Location of branches; 3 Loan negotiations; 3 Money transfer time Confirmation of the stability of the categories in different settings Tele-communicatio ns 96 interviews 59 Influential 25 Situational 12 Reactional

46 Price; 21 Customer support; 10 Change in product use; 9 System failure

Confirmation of the stability of the categories in different settings Insurance 80 interviews 39 Situational

21 Influential 20 Reactional

44 Price; 8 Effortless negotiations; 10 Insurance terms; 5 Insurance bunching

Confirmation of the stability of the categories in different settings The Swedish social-insurance system

100 interviews 21 Reactional Rules and bureaucracy Form design

Routines of the social-insurance bureau Unfriendly treatment

Changes in customer behavior not supportive of but with implication for stipulated routines.

1. Factors of the customer

relationships assign

different roles regarding

loyalty

2. Applications to different

industries

Unfriendly treatment Waiting time stipulated routines. Third case: Tele-communicati ons Longitudinal study over 6 years 140 interviews -annually over 6 years -switching stories relevant to this analysis include those

At the ‘end stations’ of the 6-year switching stories, when it was possible to assess stability, the trigger distribution was:

71 triggers

Situational: 12 Active and

Verification of the of the influential trigger as either active or passive.

Customers reacting to active triggers are more stable than

3. Not only different roles –

but, prediction of

differences regarding

the stability of the

(24)

Results –outcome stability

Roos and Gustafsson (2007)

Active customers

more stable in their

**trigger * activepassive * stability Crosstabulation**

Count

31

5

36

14

12

26

4

9

13

3

16

62

29

91 situational

influential 1

influential 2

reactional

trigger

Total

stability

Stable

Active

Passive

activepassive

Total

**trigger * activepassive * stability Crosstabulation**

Count

31

5

36

14

12

26

4

9

13

3

16

62

29

91 situational

influential 1

influential 2

reactional

trigger

Total

stability

Stable

Active

Passive

activepassive

Total

All other active

customers

more stable in their

relationships than

Passive customers

2

13

15

18

35

53

4

122

126

4

8

12

28

178

206 situational

influential 1

influential 2

reactional

trigger

Total

Unstable

2

13

15

18

35

53

4

122

126

4

8

12

28

178

206 situational

influential 1

influential 2

reactional

trigger

Total

Unstable

Passive customers

(25)

Method – trigger definitions related to outcome stability

Roos and Gustafsson (2007)

Active and

stable customers

Influential triggers can be seen in the behavior

of frequent switchers, the paradox being that their

arguments are confusing. The confusion is due to their

poor knowledge about their current relationships.

Situational triggers refer to changes in customers’

private situations that make them re-evaluate their

existing relationship with the service provider

Passive and

unstable

•One group follows advertising and searches new alternatives (Active)

•Second group waits to be contacted by a competitor (Passive)

Reactional triggers reflect customers’ increased

unstable

customers

(26)

Results –outcome stability

According to Ajzen and Fishbein (1991), factors should be separated in terms

of influence on behavior in order to allow better prediction of future behavior.

SPAT enables the influencing factors (situational, influential and reactional triggers)

to be divided so as to enhance understanding of the future stability of customer

Relationships (active/passive)

Active customers were found to be more loyal than passive customers

Relationships (active/passive)

(27)

A Model of planned and automatic decision processes

focus on outcome stability

(An extension of Ajzen’s (1991) “Model of Planned behavior”)

Argumen-Sensitivity

-situational

-reactional

-influential

Active

Behavior

Argumen-tation

Sensitivity

-influential

Passive

Behavior

-stable

-unstable

(28)

Unless the approach is clearly

“real behavior”….

.. we do not know if the results are of

- importance for loyalty

- perhaps having a communicative function

(29)

The ability to design a communication capable

of reaching its goal…

(30)

Knowing the difference

between active and passive customers is thus important

1. A passive customer is

approached by a

competitor and make

unplanned switching

2. A passive customer has

very little knowledge of

1. An active customer

has planned the

switching

2. An active customer is

looking for information

_{very little knowledge of}

their service provider

and competing service

and products

looking for information

and factual arguments

in the comparison of

products and services

(31)

Active and Passive Customers

Does it apply equally to

(32)

Purpose

PURPOSE of the study is to compare business and private

CONTEXT of the study is air travel vs.

other choices such as train, car or other airports

PURPOSE of the study is to compare business and private

customers’ choice processes

FOCUS of the study is “The airport as point of departure “

and Scandinavian hubs are major destination choices

(33)

Specify

Select Contract Order

The nature of the

company-strategy model

Perceived factors in a focal travel company The perception of the market Car Train

company-strategy model

e.g. Van Weele (2005

The nature of the

private-customers choice

models

The

Customer

Other airport Other airport Other airport

models

e.g. Srinivasan (1987)

(34)

Results

Generally

Findings indicate that:

Business customers not as bound by company policies as first

Business customers’ decision-process character does not

equal the nature of a company-strategy models

Business customers not as bound by company policies as first

thought;

(35)

Choice factors with regard to switching

Triggers

Customer-perceived

switching reasons

1 Generally

Company policy

1 Generally

deteriorating

service

Company policy

2 New alliance

partner

New alliance partner

3 Closure of

Copenhagen flight

Price

4 Departure/Arrival

time shortens

“family time”

Company moved office

5 Insecure future

Decreased benefits

Remember

“convenience”!

5 Insecure future

regarding service

Decreased benefits

6 Price

Departure/Arrival time

(36)

We can’t change the location of the airport

(37)

VF:s homepage

Newspaper

(38)

VF:s homepage

Newspaper

(39)

KCCC

(40)

KCCC

(41)

KCCC

(42)

KCCC

(43)

The first Newspaper homepage in Sweden to communicating a Swedish Airport

The first Conference center in Sweden to communicating a Swedish Airport

In order to find the loyalty enhancing communication

the message has to be ”the right” i.e. properly derived

(44)

Telecommunication

Private customers

Newsletter text modification

-15 000 customers ordinary Newsletter

-15 000 modified towards active customers

-15 000 modified towards passive customers

(45)

Test modifed text for communication

Newsletters

(46)

2010 - summary

2. Do not underestimate ”price” and ”price synonyms”

1. The focus was on reaching customers in the way

literature suggests

3. Headlines should provide customer-relationship knowledge to

passive customers

(47)

(48)

Nyhetsbrev

Landing-

page-click

relations

Action

C Bredband

kan få TV

E Pris

F Kvalitet

relations

Table 06

Juni 2011

1 SMSa

från fast

telefon

Klick specifik

artikel

39,8 %

61,3 %

40,7 %

2 Mobilt

Klick specifik

5,5 %

Bredband i framkanten för alla

6,3 %

5,7 %

behov

SMS från din fasta telefon – helt

gratis

(C Bredband kan få TV)

-SMS mellan fasta telefoner – helt

gratis

Till mobiltelefoner 69 öre/SMS

2 Mobilt

bredband

Klick specifik

artikel

5,5 %

6,3 %

5,7 %

3 Fast

bredband

Klick specifik

artikel

17,9 %

8,1 %

_{36,7 %}

behov

(C Bredband kan få TV)

-Telia Bredband i framkanten

Snabbaste bredbandsnäten –

upp till 1000 mb/s

(Modifierat)

Till mobiltelefoner 69 öre/SMS

(49)

NYHETSBREV | APRIL 2011

Hej!

Nu är våren äntligen här på riktigt och vi har massor med erbjudanden, tips och inspiration för dig som Teliakund. Vi kan bland mycket annat erbjuda förmånliga priser på sol- och golfresor, paket till Dreamhack och här intill kan du läsa mer om hur du gratis kan skicka sms från din fasta telefon. Klicka dig vidare och ta del av allt – exklusivt för just dig!

SMS från din fasta

telefon – helt gratis

Så här gör du

Hälsningar från oss på Telia

Ett bredband

i framkant

Läs mer

Har du koll på

trender?

Dela med dig – och vinn ett Spotify-abonnemang! Börja här

Orolig för

virus i din

dator?

Klicka här

VIDEOBUTIKEN

Skaffa digital-tv!

Hyr film direkt från soffan

Läs mer och beställ här

All inclusive!

Du som kund hos oss kan åka på en unik resa till Turkiet!

(50)

NYHETSBREV | APRIL 2011

Hej!

Nu är våren äntligen här på riktigt och vi har massor med erbjudanden, tips och inspiration för dig som Teliakund. Vi kan bland mycket annat erbjuda förmånliga priser på sol- och golfresor, paket till Dreamhack och här intill kan du läsa mer om hur du gratis kan skicka sms från din fasta telefon. Klicka dig vidare och ta del av allt – exklusivt för just dig!

SMS mellan fasta

telefoner – helt gratis

Till mobiltelefoner 69 öre/SMS

Så här gör du

Hälsningar från oss på Telia

Bredband i

framkanten

4 300 surfzoner

Läs mer

Gör din röst hörd!

Vinn ett Spotify-abonnemang!

Börja här

VIDEOBUTIKEN

Tusentals filmer

direkt i din TV

Hyr film från soffan

Läs mer och beställ här

All inclusive i

Turkiet!

Prisvärt erbjudande

Läs mer och boka här

Unikt golf-

erbjudande

För dig som är kund hos Telia

Läs mer

(51)

2011

1. We reached the customers!

2. Information about price and details related seems to have

effect on opening and ”klicking”

3. …. called ”short-term behavior”

4. Long-term behavior (loyalty) is the next step:

(52)

Totally, customers’ response rates were

enhanced 50 %!

(53)

(54)

Loyalty-enhancing communication

Do you want communication in your company to be:

1. An income or

2. An expense item?

(55)