Unlocking the Predictive Value of Excess and Deficit Customer Patronization Intentions

Abstract

This study assesses the value of excess and deficit patronization intentions toward a service provider in predicting future customer behavior and its financial consequences for the provider in a continuous service context. The excess and deficit patronization measures employ widely available customer feedback data and can be used by managers to identify at-risk customers and those unlikely to defect. We argue that a customer’s satisfaction provides a baseline level of patronization intentions and that excess patronization intentions—intentions greater than those that can be explained by a customer’s satisfaction with a firm’s offerings (i.e., the residuals in a model that regresses patronization intentions on satisfaction)—are generated in part by the presence of customer-level switching costs. Conversely, any deficit patronization intentions are generated in part by a customer’s variety seeking. Using data from the financial services industry, we find that these residuals serve as indicators of the presence and extent of customer-level switching cost and variety seeking. In addition to providing measures of interesting and under-researched phenomena, this suggests that the measures may serve as proxies to test existing theories concerning switching costs and variety seeking in situations where measurement and data availability have previously limited such research.

Graphical Abstract