The paradox of customer education

Abstract

Purpose The purpose of this paper is to consider the dynamics of customer education by exploring the relationship between education and customer expertise and their combined effects on customer loyalty in a high involvement investment services context. The paper also considers the service context within which customer education initiatives are delivered. More specifically, it explores the moderating effects of increasing levels of customer expertise (the outcome of customer education) on the relative importance of technical service quality (what is delivered) and functional service quality (how it is delivered) in determining the loyalty decision. In doing so, the paper aims to provide implications for the investment service firm for managing the service offering as customers develop expertise over time. Design/methodology/approach The paper proposes a conceptual model that formalises the research objectives as a series of testable hypotheses. This is followed by an outline of the research design and method. The hypotheses are tested using a sample of 1,268 high value clients from a global investment services firm. An analysis of the model and the results is presented. Findings Customer loyalty was found to be positively and significantly related to technical service quality, functional service quality, and customer education. Contrary to expectations, however, customer expertise was not negatively related to customer loyalty. Customer education was found to be positively associated with customer expertise. The main effect of customer education on loyalty was significant; however it did not diminish when customer expertise was entered into the third equation. In other words, the conditions for partial mediation were not satisfied. Finally, the positive and significant interaction coefficient between technical service quality and expertise implied that the positive effect of technical service quality on consumer customer loyalty was indeed stronger when customer expertise was high. Conversely, and consistent with expectations, the interaction term between functional service quality and customer expertise was significant and negative, indicating that the positive relationship between functional service quality and customer loyalty is diminished as customer expertise increases. Originality/value Where there is a significant amount of research on customer knowledge and expertise, there is relatively less understanding of how customers acquire such knowledge. It is hoped that this paper can shed some additional light on the subject of customer education, its impact on customer expertise and, ultimately, on the way in which service quality is perceived.

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