The effects of customer acquisition and retention orientations on a firm's radical and incremental innovation performance

Todd J. Arnold, Eric (Er) Fang, Robert W. Palmatier

Research output: Contribution to journalArticlepeer-review

Abstract

The effect of a firm's strategic focus on acquiring new customers and/or retaining existing customers (customer acquisition and retention orientations) on innovation performance is evaluated. With dyadic primary data collected from 225 strategic business units, the authors demonstrate that a firm's focus on customer acquisition enhances its radical innovation performance but hinders its incremental innovation; a firm's strategic orientation toward customer retention has the opposite effects. These effects are mediated by both customer knowledge development and the firm's resource configuration decisions. In addition, the authors provide insight into the impact of managerial decision trade-offs when implementing customer engagement strategies. The results suggest that the effect of customer acquisition and retention orientations on customer knowledge and investment decisions, and ultimately on innovation performance, is amplified when a firm consistently implements a specific engagement strategy. Implementing a dual strategy by attempting to focus on both acquiring and retaining customers undermines resource configuration decisions, with diverse effects on both radical and incremental innovation.

Original languageEnglish (US)
Pages (from-to)234-251
Number of pages18
JournalJournal of the Academy of Marketing Science
Volume39
Issue number2
DOIs
StatePublished - Apr 1 2011

Keywords

  • Customer acquisition
  • Customer retention
  • Incremental innovation
  • Innovation performance
  • Radical innovation

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Marketing

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