The purpose of this paper is to present a framework for examining the outcome of value facilitation as the added value of service provision.
Value facilitation is conceptualized as enabling, enhancing, and economical support by the service offering, as well as supportiveness by the service provider. The financial value of customers is measured by the augmented customer lifetime value (ACLV).
Referrals is found to mediate the linkage between value facilitation and ACLV. The margin multiple level and corresponding propensity to stay scores are found to be better proxies for setting up a customer oriented service development program, than the customer profit or margin level.
This paper takes a service provider perspective on service, even though the customer experience of the service provision is vital.
The proposed framework can be used for designing adapted customer strategies for different groups of customers representing different levels of added value of the service provision.
This paper extends the normative service logic notion of the role of service providers as value facilitators and supporters of their customers’ value creation activities. The calculation of ACLV is altered from ordinary customer lifetime value models by the integration of individual transaction data and propensity to stay figures from a customer survey.
The author gratefully acknowledges the helpful comments and suggestions for improvements by the two anonymous reviewers. The author also extends his appreciations to Professor Lynette Ryals of Cranfield School of Management for invaluable comments on earlier drafts of this paper.
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