It seems to be common sense that to increase profits, firms should prioritize customers (i.e., focus their efforts on the most important customers). However, such a strategy might have substantial negative effects on firms' relationships with customers treated at a low priority level. Prior research does not indicate satisfactorily whether and how customer prioritization pays off. Moreover, although customer prioritization may be strongly present in firms' marketing strategies, firms frequently fail to implement such a strategy. Therefore, it is also important to investigate empirically by which means firms can facilitate implementation. The authors address both issues and conduct a cross-industry study with 310 firms from business-to-consumer and business-to-business contexts together with two independent validation samples. The results show that customer prioritization ultimately leads to higher average customer profitability and a higher return on sales because it (1) affects relationships with top-tier customers positively but does not affect relationships with bottom-tier customers and (2) reduces marketing and sales costs. Furthermore, the ability to assess customer profitability, the quality of customer information, selective organizational alignment, selective senior-level involvement, and selective elaboration of planning and control all positively moderate the link between a firm's prioritization strategy and actual customer prioritization.

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Although highly relevant for marketing practice, few studies provide conceptual and empirical insights into customer portfolio management. Furthermore, most approaches to analyzing customer portfolios are static. This article discusses three neglected key issues relevant for a dynamic customer portfolio analysis: (1) Does a static versus a dynamic valuation lead to a different prioritization of customer segments in a portfolio? (2) How does offensive or defensive management of segment dynamics affect portfolio value? and (3) Do reliable predictors for dynamics of a customer's position in the portfolio exist? As a tool for customer portfolio analysis, the authors develop a segmentbased customer-lifetime-value model. They capture customer dynamics by analyzing how customers switch between segments of different values across time. The authors apply their tool with longitudinal data from four firms with up to 300,000 customers. The results from the empirical analysis and a simulation study provide answers to the three key issues raised. First, compared with a dynamic analysis, a static approach overestimates the value of some customer segments but underestimates others. Second, a defensive versus offensive management of value dynamics is relatively more appropriate for middle-tier segments, whereas the opposite holds true for bottom-tier segments. Third, general customer characteristics and aggregated transaction characteristics indicate future segment dynamics, whereas specific product usage data differentiate customers according to current value.

This article suggests that mental budgeting processes provide a further understanding of how and to what degree price increases negatively affect a customer's future purchase behavior in a particular category of expenses. Furthermore, the authors analyze how customer income and different price presentation tactics alter this reaction. Results of two experimental studies using both students and non-students show that customer income attenuates the negative effect of a price increase on the likelihood of a future purchase in a particular expense category. As an underlying mechanism, the influence of customer income on future purchase behavior is partially mediated by the degree to which customers engage in mental budgeting. Moreover, mental budgeting strengthens the negative effect of a price increase on a future purchase in the same category of expenses, whereas it does not alter the effect of a price increase on a future purchase in another category. Finally, the framing of a price increase as a percentage versus in absolute terms leads to a lower likelihood of a future category purchase.

While retention of highly qualified employees is vital for professional services firms, prior research has largely neglected the role of customers as a driver of employee satisfaction and retention. Drawing on an experimental study and a dyadic field study, this article shows that client satisfaction is an important determinant of employee satisfaction, which in turn increases employee retention. Thus, for professional services firms, the common logic in relationship marketing that employee satisfaction affects client satisfaction can also be reversed. First, in line with balance theory, an attitudinal transfer occurs from the client to the employee which is stronger when both share the same opinion about their collaboration. Second, in line with Herzberg’s motivational theory, client satisfaction indirectly affects employee satisfaction by affecting the perceived appreciation the employee receives from the customer. These findings have three major managerial implications: First, investments into client satisfaction might pay off double by enhancing revenues and profit on one hand, and enhancing employee satisfaction and retention, on the other hand. Second, positive client feedback has positive effects on employee satisfaction and recognition. Third, these results suggest that marketing and human resource issues are intertwined in professional services firms. Thus, service firms should encourage ample communication and collaboration between these functions.

Transformative services represent a crucial topic in future service research. Particularly in the energy sector, consumer adoption of transformative-often IT-enabled-services is essential to increased environmental sustainability. As adopting these services increases both individual and collective well-being, research has to delve more deeply into the origins of consumers' motivations. For this reason, this study aims at augmenting the understanding of how different types of motivation determine consumers' intention to adopt transformative services. The proposed model integrates the theory of planned behavior and the self-determination theory and is tested with survey data gathered from 462 users and 537 nonusers of home energy management services. Results indicate that consumers' motivations are major direct determinants of intentions to adopt. While this finding notably holds when consumers perceive the adoption as self-determined and internalize associated values such as environmentalism, motivations based on external rewards and feelings of compulsion matter to a lesser extent. A comparison of users and nonusers reveals important differences in motivation, in particular that extrinsic motivations tend to be more relevant for nonusers than for users.Keywords IT-enabled services, consumer motivation, information technology, transformative services, service adoption Recent service research has underlined the major strategic importance of sustainability and technology infusion for service innovations (Kunz and Hogreve 2011;Ostrom et al. 2010), making the development of transformative services one of the current top research priorities. In investigating transformative service, which is a ''service that centers on creating uplifting changes and improvements in the well-being of both individuals and communities'' (Ostrom et al. 2010, p. 12), researchers highlighted that these services should be particularly effective for improving the sustainability of production and consumption.Research on information systems (IS) has also emphasized that information technology (IT) is a ''change actant in sustainability innovation '' (Bengtsson and Å gerfalk 2011, p. 96), and that ''Green-IS'' in particular presents a major future challenge for the IT sector. Research analyzing how IS can help reduce energy consumption to support environmental sustainability is of particular interest (Watson, Boudreau, and Chen 2010). In this respect, ''emerging information and communication technology services can have a major impact on future energy and resource consumption through a range of services, including remote working, energy and waste management systems, improved logistics, and so on '' (Ostrom et al. 2010, p. 12).Thus, technology and service infusion as well as transformative services are particularly important in the energy sector.Ongoing liberalization of energy markets, scarcity of and dependence on fossil resources, and environmental concerns have been triggering substantial changes throughout the industry. More specifica...

Despite the high practical relevance, prior research does not provide a clear picture whether the effectiveness of new product preannouncements is contingent upon order of entry and whether the message content of preannouncements for pioneering products should be different from those for followers. Drawing on diffusion research, the authors examine how preannouncements that focus on risk reduction and the product's relative advantage influence the relationship between preannouncement intensity and new product success, taking into account order of entry. A crossindustry study investigating 151 new product launches shows that for pioneers, a message focus aimed at reducing perceived product risk positively influences preannouncement effectiveness. Furthermore, a relative advantage focus negatively affects preannouncement effectiveness and thus is rather counterproductive for pioneers. With regard to early followers, results indicate a positive influence of a risk reduction focus on preannouncement effectiveness. A relative advantage focus, however, is only effective if the product category is already established when the early follower product is launched. Finally, for late followers, only preannouncements which strongly emphasize the relative product advantage lead to a positive effect of preannouncements on new product success.

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