RESEARCH Business Economy

CONSUMER ATTITUDES
Customers’ choices based on expectation of future use, not on satisfaction

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

2/1/02

CHAMPAIGN, Ill. — Make your customers happy and they'll come back for more. That line of thinking has dominated American business marketing for decades.

But is "satisfaction" really so vital in consumer decisions? More broadly, are the past attitudes of customers good predictors of their future actions? Tiffany Barnett White, a University of Illinois marketing professor, and two other researchers offer intriguing clues that other factors are at work in a paper published in the winter issue of the Journal of Marketing.

Surveying households with a paid television cable service, White and her colleagues found that "overall satisfaction" was not significant in determining whether the household kept or dropped the service. Rather, the expected future use by the household contributed to whether the cable service was kept or dropped. "High expectations" of future use overrode "low satisfaction" with the product, while "low expectations" of future use negated high levels of satisfaction.

How much a customer estimated he or she would use the service in the future was "a much better predictor of customer retention than traditional models that focus on overall evaluations of the service," the researchers wrote.

Such findings have practical value to marketers, White and her colleagues noted. "If a firm wants to retain current customers, customer expectations of future benefits should be a primary focus. Marketing managers need to consider how such expectations can be managed and how to measure a customer’s expected future benefits and current usage levels."

In terms of marketing a product or service, increasing actual use or the expectation of greater use would help increase the likelihood that the customer continues the relationship.

The researchers also examined how "anticipated regret" can be used by marketers to influence future choices. Defined as "the emotion people experience when they realize or imagine that their present situation could be more positive if they had behaved differently," anticipated regret can be integrated into marketing communications by using such tools as "second chance" offers to encourage customers to re-subscribe to a service.

"Firms that consider satisfaction to be the primary tool to manage customer retention are missing significant opportunities," the paper concluded. "Our findings suggest that consumers are significantly forward-looking when they make the decision to continue or discontinue a service relationship.

Failure to consider these components may lead firms to underestimate the likelihood that satisfied customers may defect and to overestimate defection rates for dissatisfied customers, thereby potentially misallocating resources to customer retention efforts."

The paper is titled "Dynamic Customer Relationship Management: Incorporating Future Considerations Into the Service Retention Decision."