e-CRM and Digitization of Word of Mouth

Abstract

Well-known e-CRM strategy is to focus on profitable customers and pay less attention to unprofitable ones. Moreover, some researchers recommend not serving unprofitable ones any more. However, it often neglects customers indirect value. Deselecting unprofitable customers can raise the issue of bad word-of-mouth publicity especially in the age of the Internet. Some studies pointed out that a customers decision to buy a product or service is often strongly influenced by others. In this paper, we consider customers word-of-mouth effect on quality learning of inexperienced customers. We show that firms implementing e-CRM must take the effect into the consideration when deselecting unprofitable customers.