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Effects on New Customer Acquisition by Retained Customers in Professional Services Kent Eriksson,

By Anna Löfmarck Vaghult

Abstract

Is there a way for a firm to successfully balance between retaining clients and selling to new customers? When can new clients be gained through the existing relationships? This paper sets out to study the effects on different kinds of relationship substance within the present business relationships, on the number of new customers added to the supplier. The conceptual model is tested on a sample of business relationships in professional services. The results show that the relationship satisfaction of present customers (a less embedded type of substance) provides more new customers to the supplier. Satisfied customers create opportunities for word-of-mouth referrals to potential users. Satisfaction also increases retention, while a more embedded kind of relationship substance, organisational change in the customer firm, reduces customer retention, at least in the consulting business. Retention in its turn has a negative effect on the number of new customers to the supplier. The results suggest that a firm’s deep collaboration with present counterparts partly exclude the addition of new customer relationships. The supplier has less time and efforts to invest in new relationships and it gets increasingly difficult to explain what other firms may gain from a similar cooperation. Satisfied clients in referral networks, who have experienced an explainable result, can be a source to add new customers. An implication for management is to select between deep client collaboration on one hand, and widening or renewal of the customer base on the other. Operations with standardised services need to be managed separately from customised activities. The use of referral networks increases if used in the more standardised approach

Year: 2011
OAI identifier: oai:CiteSeerX.psu:10.1.1.197.3629
Provided by: CiteSeerX
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