How Customer Self-Determination Influences Relational Marketing Outcomes: Evidence from Longitudinal Field Studies
Published 2/1/2006
Author: Utpal M. Dholakia
View this content
Executive Summary
Over the past two decades, marketers across industries have embraced the relationship marketing paradigm, widely using concepts such as lifetime value, customer equity, and share of wallet in practice. However, many practitioners have also noted that relationship marketing programs in consumer settings are difficult to execute successfully. For example, a majority of customer relationship marketing programs fail to yield expected returns when implemented, and most customers do not engage in long-term relationships, even with firms that are responsive to their needs. In this regard, a key challenge for firms, especially in consumer settings, is how to gauge each customer’s interest in a relationship with them, as is done in industrial settings through extensive dialogue with customers.
In the current research, the role of customers’ self-determination—defined as perceptions of joining a firm as a result of a person’s own initiative versus being induced to join—in influencing relational outcomes for firms in consumer settings is studied. In the first two field studies, the author finds evidence of more relational behaviors (e.g., greater product purchase, higher profitability, lower defection rates) and higher motivation levels (e.g., greater desire to purchase, perceptions of control, anticipated emotions) regarding purchase among self-determined customers than among firm-determined customers. These results suggest that self-determined customers are better relational candidates for firms in consumer settings.
The author also examines how customers’ self-determination interacts with two types of relationship marketing programs: reminder coupons, which consumers view as relatively more controlling, and relational rewards, which customers view as relatively more informative of their value to the firm. The results reveal that sending a stylized reminder coupon to encourage repeat purchase has negative effects (Study 3) and that automatic enrollment in a relational rewards program has positive effects on relational behaviors of self-determined customers (Study 4). In both cases, firm-determined customers are less influenced by rewards. Because the field studies were conducted in three different industries, they provide broad-based evidence for the operation of customer self-determination.
These findings raise questions about the effectiveness of aggressive acquisition marketing programs that many marketers currently favor. Targeting and aggressively promoting to persuade customers to buy the very first product or service with the firm in the hope of cultivating long-lasting relationships may not be the best approach for firms that are relationally oriented. By showing that behavior-inducing rewards do more harm than good with the customers that are the best relational candidates, the results recommend that relationally oriented firms should refrain from offering rewards that their customers view as controlling. Instead, a passive, “hands-off” approach may be better. Conversely, brand-building efforts (e.g., image advertising), even if they are difficult to measure or allocate as costs to individual customers in lifetime value calculations, might be effective in the long run because they make customers want to form a relationship with the firm on their own initiative.
Biography
Utpal M. Dholakia is Assistant Professor of Management in the Jesse Jones Graduate School of Management at Rice University, Houston. He has a master’s degree in Psychology (1997) and a doctoral degree in Marketing (1998) from the University of Michigan, a master’s degree in Operations Research (1994) from the Ohio State University, and a bachelor’s degree in Industrial Engineering (1993) from the University of Bombay. His research interests lie in studying motivational psychology of consumers and online marketing issues, such as virtual communities and online auctions. He also studies relational aspects of consumer behavior. Professor Dholakia’s research has been published in Marketing Science, Journal of Marketing, and Journal of Consumer Research, among others. He has worked extensively with large and small firms in financial services, high-tech, packaged goods, and service industries. He is also a frequent speaker at marketing conferences.
J Marketing Research, Volume 43, Number 1, February 2006
View Table of Contents.