The Impact of Goal Enabling Technology on Customer Lifetime Value
1 Pages Posted: 18 Jun 2021
Date Written: May 31, 2021
Service providers increasingly offer goal enabling technologies (GETs) in the pursuit of becoming more customer-centric. The popularity of GETs is based on the assumption that enabling customers to set service specific goals can improve both the service's value to the customer and the customer's value to the service. Firms need to know whether this assumption holds and whether there are boundary conditions that govern where the assumption does not hold. We use panel data from an investment services provider that introduced a GET to examine how customers who specified goals with GET changed their behavior and thereby customer lifetime value. We leverage a synthetic control structural matching method to enable estimation of changes in customer behavior for goal setters relative to a comparable control group. The results indicate that the introduction of GET increases customers' goal-congruent behavior which in turn improves customer lifetime value. The results also indicate that the impact of GETs depends on several goal characteristics, namely customers' perceived goal attainment difficulty, motivation, and commitment at the time of goal setting. An inverted U-shape for each of these goal characteristics is identified, a feature that can guide practitioners to personalize goals to optimize performance for customers and firms.
Keywords: Goal enabling technology, Customer Lifetime Value, Synthetic Controls
JEL Classification: M3
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