Analyzing behavior in customer relationships accounting for customer-to-customer interactions

PhD ceremony: Mr. H. Risselada, 16.15 uur, Academiegebouw, Broerstraat 5, Groningen

Dissertation: Analyzing behavior in customer relationships accounting for customer-to-customer interactions

Promotor(s): prof. P.C. Verhoef, prof. T.H.A. Bijmolt

Faculty: Economics and Business

Customer relationship management (CRM) is common practice in many firms today. The core of a CRM strategy is to develop strong relationships with customers. Modeling behavior in customer relationships, such as adoption and churn, is crucial for firms to develop a successful CRM strategy. A recent development which has substantial consequences for customer behavior is the increasing importance of social networks in consumers’ daily lives. In this thesis we present three studies on modeling behavior in customer relationships with a focus on the role of customer-to-customer interactions. In chapter 2 we investigate the staying power of commonly used models to predict customer behavior and show that the staying power is very low. In chapter 3 we show that the effect of social influence on behavior is decreasing from the product introduction onward and is dominated by the effect of direct marketing from the fifth month onward. We found no significant interaction between the effects of direct marketing and social influence, which illustrates that direct marketing remains an important marketing instrument. In chapter 4 we show that social influence is mainly determined by network characteristics, such as tie strength (between customers) and the number of contacts of a customer. We also show that the determinants of social influence differ across products and behaviors. Firms may use our findings to improve their social marketing campaigns, such as referral and viral marketing campaigns.