Scandinavian Working Papers in Economics

Working Papers,
Hanken School of Economics

No 553: Customer Energy in Relationships

Kristina Heinonen () and Tore Strandvik ()
Additional contact information
Kristina Heinonen: Hanken School of Economics, Postal: Arkadiankatu 22, P.O.B. 479; FIN 00101 Helsinki, Finland
Tore Strandvik: Hanken School of Economics, Postal: Arkadiankatu 22, P.O.B. 479; FIN 00101 Helsinki, Finland

Abstract: All companies have a portfolio of customer relationships. From a managerial standpoint the value of these customer relationships is a key issue. The aim of the paper is to introduce a conceptual framework for customers’ energy towards a service provider. Customer energy is defined as the cognitive, affective and behavioural effort a customer puts into the purchase of an offering. It is based on two dimensions: life theme involvement and relationship commitment. Data from a survey study of 425 customers of an online gambling site was combined with data about their individual purchases and activity. Analysis showed that involvement and commitment influence both customer behaviour and attitudes. Customer involvement was found to be strongly related to overall spending within a consumption area, whereas relationship commitment is a better predictor of the amount of money spent at a particular company. Dividing the customers into four different involvement / commitment segments revealed differences in churn rates, word-of-mouth, brand attitude, switching propensity and the use of the service for socializing. The framework provides a tool for customer management by revealing differences in fundamental drivers of customer behaviour resulting in completely new customer portfolios. Knowledge of customer energy allows companies to manage their communication and offering development better and provides insight into the risk of losing a customer.

Keywords: involvement; commitment; customer energy; segmentation; customer portfolio; customer dominant logic

26 pages, September 6, 2010

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