Longitudinal upgrades and asymmetric effects of satisfaction and perceived-value

Abstract

Purpose The purpose of this paper is to investigate how customers’ upgrading/downgrading (t−1) behavior may be predictive of future spending. Further, this paper also investigates how customers’ post-consumption evaluations of upgrades and downgrades [satisfaction(t−1) and perceived value(t−1)] may moderate the relationship between upgrades/downgrades and future spending. Design/methodology/approach The predictions are tested using a large longitudinal data set of river cruise purchases (N = 48,103) and largely replicated using a data set of zoo membership purchases (N = 2,469). Findings Satisfaction(t−1) mitigates the positive relationship between prior upgrades(t−1) and future spending(t). In contrast, perceived value(t−1) magnifies the positive relationship between prior upgrades(t−1) and future spending(t). However, no positively moderating effects are observed to alleviate the negative relationship between prior downgrades(t−1) and future spending(t). Practical implications This research suggests that managers should work hard early in customer–firm relationships because of an asymmetric difficultly in altering the trajectory of an established relationship. Specifically, relationships that are trending downward (as consecutive downgrades would suggest) are difficult to repair – a mechanism to alter this trajectory is not observed. In contrast, relationships that are trending upward (as consecutive upgrades would suggest) can be improved with high perceived value evaluations but also degraded with high satisfaction evaluations. Originality/value This research should recast marketers’ understanding of the value of customers’ upgrade and downgrade decisions. Instead of using customers’ upgrade or downgrade decisions as the dependent variable, or final outcome in buyer behavior, this study shows how the accumulation of prior upgrades and prior downgrades, over time, acts as a bellwether of the customer–firm relationship. Further, to the best of the authors’ knowledge, this study is the first to connect these upgrade/downgrade decisions to customers’ evaluations of those purchases to understand how individual purchases can impact the overall customer–firm relationship.