Mixed Effects of Company-Initiated Customer Engagement on Customer Loyalty: The Contingency Role of Service Category Involvement

Abstract

Customer engagement, a customer’s active participation in and connection with a firm’s services, has been promoted as a key driver of customer loyalty. Yet, insights on how to effectively manage engagement are scarce. This article employs an experimental study to assess the loyalty-effect of customer engagement and disentangle the effectiveness of company-initiated versus customer-initiated engagement for different customer types. We establish a positive impact of customer engagement on customer loyalty, mediated by company image. However, adopting a finer-grained view on engagement effectiveness, we show mixed effects of company-initiated engagement contingent on customers’ service category involvement. Specifically, for high involvement customers, company-initiated engagement positively affects loyalty, while it impedes loyalty for low involvement customers. Company image and reactance toward the company act as mediating mechanisms. We provide guidance to managers on how to design and whom to target with their engagement strategies.

The role of customer engagement facets on the formation of attitude, loyalty and price perception

“…While affective attitude (partially) mediates the impact of CEB engagement behavior on repurchase intention as well as the relation of CEB on price perception, it can be stated that engaged customers are more likely to be more loyal and have a higher willingness to pay. This is in line with results of previous research (Steinhoff et al, 2018).…”

“…This might arise because customers may be torn between the opportunistic prospect of receiving an incentive, the public discussion about a service and the formation of affective attitudes (Ganesan et al, 2010). Customers who are less involved might perceive proactive attempts to publicly review a destination as annoying, diluting their image of the destination, reducing the positivity of their affective attitude toward the destination (Steinhoff et al, 2018).…”

“…To manipulate the perceived level of satisfaction, two hypothetical scenarios were designed. Experimental scenario studies are commonly used in marketing research and are well-suited for testing causality and the direction of a hypothesis (Steinhoff et al, 2018). The hypothesized effects were tested in the context of hotels, as respondents are supposed to have experiences in this context and this industry is frequently used by researchers interested in customer satisfaction and loyalty (Mauri and Minazzi, 2013;Smith and Bolton, 1998).…”

“…A customers' emotional attachment is further influenced by his or her satisfaction with and value from the service or the product provided by the customers' purchase behavior (Grisaffe and Nguyen, 2011). Engaging with a company is synonymous with customers committing themselves to the company, whereby they start forming positive affective attitudes toward it (Steinhoff et al, 2018). Those customers, furthermore, are more likely to be motivated to align their positive affective attitudes with corresponding behaviors such as loyalty.…”

“…The few studies examining CEBs in touristic contexts did not investigate the impact from a senders' perspective (Wei et al, 2013). In addition, recent research does not take into account customer satisfaction as an antecedent (Romero, 2017) or holds the level of customer satisfaction constant (Steinhoff et al, 2018). Furthermore, these studies did not consider the outcomes of customer engagement or limited their research to only one facet of engagement behaviors.…”