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Zeitschrift für Betriebswirtschaft

, Volume 81, Supplement 2, pp 77–94 | Cite as

Evaluating the consequences of abandoning unprofitable customers: A comparison of direct and indirect abandonment strategies

  • Michael Haenlein
  • Andreas M. Kaplan
ZfB-SPECIAL ISSUE 2/2011

Abstract

Due to the increasing use of customer databases in many industries, companies nowadays have high visibility about the profitability of individual-level client relationships. This has led some researchers to recommend the implementation of value-based customer management strategies, including the abandonment of unprofitable customer relationships. In this context firms are faced with the choice between direct and indirect abandonment approaches. While direct abandonment strategies tend to be more efficient than indirect ones (i.e., immediate termination of the relationship vs. hoping that the unprofitable customer may leave on her own) they are also claimed to be associated with more severe negative reactions and higher abandonment cost. Based on two surveys among 965 US customers we provide evidence that, despite these beliefs, direct and indirect abandonment strategies do not differ in their negative impact on the abandoning firm. Given that (indirect) abandonment costs are therefore likely to be similar for both approaches, direct abandonment appears to be the recommendable approach for relationship dissolution.

Keywords

Relationship marketing Customer Relationship Management (CRM) Relationship dissolution Unprofitable customer abandonment 

JEL Classification

M31 

Notes

Acknowledgement

This research has been supported by a Marketing Science Institute research grant (No. 4-1416).

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Copyright information

© Gabler Verlag 2010

Authors and Affiliations

  1. 1.ESCP EuropeParisFrance

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