Understanding Experience-Based Customer Inertia to Effectively Target Proactive Loyalty Rewards
Customer inertia operates implicitly to secure customers’ continued business. This research adopts a multidimensional characterization of customers’ past experiences to explain how natural inclinations to minimize regret (stemming from magnitude of past experience: characterized by length and breadth) and minimize thinking (stemming from stability of past experience: characterized by consistency) manifest as inaction and resistance to change established consumption behaviors. These dual inertia foundations also explain differential customer responses to the same marketing initiatives. Complementary studies from a survey and a field experiment support the proposed model and reveal that the affirmation from proactive loyalty rewards can reinforce inertia based on “regret minimization” but the same proactive loyalty rewards can disrupt inertia based on “thinking minimization” if they alter the underlying consumption context. Consequently, even well-intentioned proactive loyalty rewards can be ineffective or detrimental depending on the type and strength of the inertia already present.
More information on Dr. Lena Steinhoff can be found at: https://www.bwl.uni-rostock.de/institut/junior-seniorprofessuren/juniorprofessur-fuer-abwl-dienstleistungsmanagement-prof-dr-lena-steinhoff/