Modeling customer portfolios in competitive B2B service markets to evaluate the relationship between loyalty and customer attractiveness
Research Square (Research Square)(2023)
Abstract
Abstract In competitive B2B service markets, customer loyalty may be a necessary but not sufficient condition for achieving firm profitability. Assuming this, we design a portfolio analysis approach with a novel four-quadrant taxonomy to evaluate the relationship between loyalty and customer attractiveness. Employing an attractiveness matrix and stepwise stratification analysis, we evaluate 158,639 transactions associated with 616 business customers of a Taiwanese global freight forwarder. Our results indicate that in this competitive B2B service market, customers in the “pure loyalty” and “profitable disloyalty” segments accounted for 6% and 19% of customers, respectively. Customers with “pure loyalty” supported long-term profits through relational attractiveness , and those with “profitable disloyalty” supported short-term profits through transactional attractiveness . The largest group of customers (34%) exhibited “spurious loyalty” with low transactional value, and they are therefore less attractive from a firm value generation perspective. As traditional customer classification methods suffer from time lags and do not account for competition effects, our approach (using short-term observations around attractiveness and profitable loyalty) offers service suppliers aiming to enhance their profitability a tool to quickly identify segment customer portfolios and reveal distinctive characteristics of “golden customers”.
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Key words
customer attractiveness,competitive b2b service markets,customer portfolios,loyalty
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