Customer Service Membership Upgrade And Downgrade Decision

Continuous service providers often employ membership system to manage customer relationship.Customer decision to upgrade or downgrade service membership directly affects firm performance.But extant studies pay more attention on service membership renewal,and rarely concern the service membership upgrading and downgrading behavior.The antecedens and consequences of service membership upgrading and downgrading have not been thoroughly studied in both theory and practice.Based on the literature review and summary of service renewal,service modification and customer retention,this paper employs relationship marketing theory,prospect theory and self-determination theory to analyses the different effects of transactional factors and relational factor on customer service membership upgrade decision and downgrade decision,and discusses the impact of external competition shocks.And then the upgrading(downgrading)of customer service membership are divided into structural-invariant and structural-variant ones.Finally,this paper compares the differences between the effects of transactional factors and relational factors on two kinds of customer service membership upgrading and downgrading,and the influence of customer lifetime value and customer churn.A large sample of empirical results from the telecom industry shows that the transactional factors have greater impacts on the upgrading of customer service membership,and the relational factors have stronger effects on the downgrading of customer service membership.Moreover,external competition shock negatively affect service membership downgrading and positively influence service membership upgrading,the relational factors suppress the influence of external competition shock on customer service membership downgrading.In service membership upgrading,transactional factors have greater impact on structural-invariant service membership upgrading with the relational factors have a stronger effect on structural-variant service member upgrading,and customers who conduct service membership upgrading with structural-variant have higher customer lifetime value.In member downgrading,transactional factors have stronger impact on the downgrading of service members with structural-variant,with the relational factors have greater negative impact on service membership downgrading with structural-invariant,and customers who conduct structural-variant service membership downgrading have higher probability of churn.