After the Harvest Comes the Fallow Phase

Why do clients who have expressed satisfaction at the conclusion of a service encounter too frequently appoint an alternative service provider when next they have a need for the service? In the author’s work over a decade with various professions, this behavior has been regularly observed in conditions of discrete consumption of the service. For example, an architect whose client expressed complete satisfaction on completion of a project is surprised to find the next project given to a competitor.

When the service is continuous, as it would be with a firm of auditors working for a major corporation, should the relationship be ended by either party, the break will be deliberate and formally announced. Often the firm that believes it is the incumbent in a relationship, which requires an appointment for each project, learns that it has not been appointed for new work only when it sees another name on the project board.

The danger period for this to occur is in the interregnum between service completion and new problem recognition. During this time—which we call the Fallow Phase— clients are susceptible and are exposed to a battery of communications and signals that prime them for the alternative evaluation that lies ahead. We propose that the longer the Fallow Phase, the greater the danger to the incumbent.

This article outlines the problem and suggests that professional firms should adopt the principles of brand equity management and maintenance to vitiate the dangers implicit in the Fallow Phase. Examples will be given and suggestions made as to future research that could provide management with guidance in creating greater and more enduring client loyalty to their professional brand.

Introduction

This paper draws the attention of service marketers to an aspect of customer retention that has received insufficient attention from academics and researchers in the field. It concerns, primarily, those services where consumption consists of discrete transactions rather than continuous delivery (Lovelock 1983). The particular area of focus is professional services.

The area of danger for a service firm is the time that elapses between completion of the service encounter and when problem recognition prompts renewed search, evaluation, and re-appointment. That period is not a cognitive and affect void in which previously developed memories, opinions, and levels of satisfaction hibernate. Researchers have shown that we constantly absorb messages through word of mouth, marketer controlled communications, and personal experience (Bayus 1985; Zeithaml, Berry & Parasuraman 1993). Consumers learn about alternatives through a process of rehearsal and elaboration (Engel, Blackwell & Miniard 1995).

During—or even before—this Fallow Phase period, consumers are quite likely to learn of alternative service suppliers and store that knowledge away in long-term memory for future use. They might hear of a new firm of bright, young architects, or a hairdresser who did a particularly good job on a friend or relative’s hair. They might, when the need next arises, despite their previously expressed satisfaction, decide to “give the new firm a go”.

This smacks of the switching behavior of consumers who will shift between brands within an established portfolio for such reasons as pricing, inconvenience, a better product, and service encounter failures (Keaveney 1995; Kumar 2002).

Based upon insights from real-world case studies in professional services—some of which will be covered here—it can be hypothesized that there is a negative correlation between time elapsed from service encounter completion and level of commitment to repeat. This reducing level of commitment makes the client increasingly susceptible to suggestions from alternatives of improved or more convenient services. Moments of dissatisfaction that, during the encounter, would have been perceived as minor in the context of the client’s global evaluation, now assume greater significance and importance (see the later section “Insights from Brand Equity Research”).

In the study covered by this abstract, we highlight this interregnum and suggest that one approach to minimizing the threat it poses is to use the tools emerging from the relatively new area of brand equity study (see “Brand Equity Signals Continuity”).

Customer Defection and Retention

Lovelock & Wright (2002:88) present a model of the purchase process for services. It has three main stages: the pre-purchase stage when a need is recognized and alternatives evaluated, followed by the service encounter stage when the service is utilized, and ending with the post-purchase stage when satisfaction and dissatisfaction are evaluated and future intentions are established. The Fallow Phase is the interregnum between post-purchase and the next pre-purchase round.

The value of retention and of reducing defections is well documented (e.g., Reichheld 1996). Much emphasis is placed on the service encounter to ensure that the customer exits the relationship in a satisfied frame of mind, and that the perception of service quality matches or exceeds expectations (Zeithaml et al 1993). It is implied that switching decisions take place during the service encounter or at the post-encounter evaluation phase (Keaveney 1995; Ganesh et al 2000). However, if the service provider decides to end the relationship, this will typically take place during the Fallow Phase (Halinen & Tähtinen 2002).

Equally, if a customer who gave every indication of being satisfied when emerging from the previous encounter decides not to use the service again when the need next arises, this decision will probably take place during the Fallow Phase. The disturbing aspect of this decision is that the service provider may never know that the satisfied customer has gone elsewhere, or may learn when it is too late. It might also be so that in some circumstances the longer the relationship, the more likely this is to happen (e.g., Grayson & Ambler 1999).

Service As a Cycle

Service firms gain well-documented benefits from loyal customers who enter into long-term relationships with the firm. Gwinner, Gremler & Bitner (1998:101) describe the most commonly cited of these benefits as increased revenues through resistance to competitive offers and willingness to pay a premium price; more predictable sales and profit streams; additional sales through loyal customers buying additional goods and services; and referral business through positive word-of-mouth recommendations.

Long-term relationships also reduce customer turnover and can lower costs of customer acquisition and cost to service because marketing, sales, and setup costs are amortized over longer periods of time (see Lovelock & Wright 2002:106 for a summary of these benefits).

Morgan & Hunt (1994) propose that relationships between service providers and customers (that result in these benefits) are based on commitment and trust. Garbarino & Johnson (1999) have shown that satisfaction has a variable impact on overall future intentions and contributes to trust under certain conditions. These are some examples of a rich body of study into the service industry and the nature of the customer relationship (e.g., Jackson 1985; Zeithaml; Berry & Parasuraman 1993; Berry 1995).

Notwithstanding this rich stream of research into how service providers should build long-term relationships, customers continue consciously to defect. Keaveney (1995) examined switching behavior and identified eight main reasons for this. More recently, Ganesh, Arnold, and Reynolds (2000:65) made the point that “some of the most satisfied customers might (still) switch for reasons beyond the control of the firm and at times even beyond the control of the consumer.”

Halinen & Tähtilen (2000:167) propose that relationships end because the actors either jointly or independently chose to end it—it is forced on the actors, or it occurs naturally. This assumes some transaction, negotiation, or communication in bringing the relationship to an end. What is not covered in their intensive study is the relationship that simply dissolves without comment, explanation, or apparent cause.

Insights from Brand Equity Research

The idea of a recognized Fallow Phase as part of the full service cycle implies that there should not be a separation between brand-centered and customer-centered marketing as suggested by, for example, Bell, Deighton, Reinartz, Rust & Swartz (2002). The brand is the valuable asset but it is the customer, through repeat usage, who endows it with its future economic benefits.

Brand equity emerged at the end of the 1980s as the result of a challenge mounted by the finance community which threatened to take ownership of brands as Merger and Acquisition assets. During the 1980s firms bought other firms to gain control of their brands. This was thought to be cheaper than new product development since major brands have existing distribution, cash streams, awareness, and customer loyalty. When brands started appearing on balance sheets (a practice that was ultimately halted by the accounting profession) the marketing community responded and, given impetus by the Marketing Science Institute (MSI), brand equity became a core topic of research and operational application.

Significantly, but not surprisingly, the benefits outlined above that accrue to service marketers from building customer loyalty are the same that are associated with strong brand equity (Dekimpe et al 1996; Keller 1998). The basis of brand equity, according to Keller (1998), is Brand Knowledge Structure (BKS). Drawing on psychology and neuro-science, Keller describes BKS in terms of the network memory model in which nodes containing chunks of information are linked to other nodes which connect when activated by some stimulus, such as a need.

BKS is conceptualized as comprising both brand awareness and brand image. Awareness is the anchor node which responds to a need such as thirst. Favored brands are those that have strong, favorable, and unique associations that link to awareness when the need is activated. Marketer-controlled sources of information and image should be designed to build these associations. Brand management’s on-going task is to maintain them at levels that support customer loyalty. Thus, strong brand equity leads to greater future economic profit flows and enhanced brand asset value.

While goods marketers are able to attach associations to the memory of a physical good, service marketers have to create an image around an experience, an act, or performance (Keller 1998:612). Strong, favorable, and unique associations with high levels of both spontaneous and prompted awareness in the service sector captured in the structure of the service brand (BKS) is a powerful reminder of the service experience and is a driver of repeat usage.

Brand Equity Signals Continuity

This paper argues that service marketers need to understand more fully Brand Knowledge Structure as the source of brand equity (Keller 1998) to ensure that brand equity built during the encounter is not eroded by new knowledge and information during the Fallow Phase.

When consumers exit the encounter phase of a service cycle, they are aware of the brand name of the service provider and associate the name with several determining attributes. Their evaluation of these attributes can be graded according to strength, favorability, and uniqueness. If the ratings are high on each of these dimensions, the consumer can be said to be satisfied, and the service provider is entitled to assume that the consumer will return when the need next becomes known. However, as has been pointed out earlier, hard-won brand equity can be eroded by new knowledge and information during the interregnum.

In professional relationships, firms entertain clients and even take them away for holidays. The value of this must be questioned because it is quite probable, depending on the value of projects the client is able to award, that competitors are neutralizing these tactics by taking similar actions. The only controlled contact that a marketer can have with the consumer during the Fallow Phase is through marketing communications.

Erdem & Swait (1998) have examined brand equity from the point of view of signaling theory from information economics. They explain a brand signal as comprising the firm’s past and present marketing mix strategies. In the service sense, this would include the consumer’s past experiences and the firm’s present communication to confirm the evaluation of these experiences.

They conclude from their experiments that brand loyalty emerges as a consequence of brand equity, not as an antecedent. This is important in the context of this discussion because the brand equity that is built up during the service encounter can be eroded by intervening factors, thus destroying the concept of loyalty. They also contend that informational aspects in the market affect brand preference. “As signals of product positions, brands may credibly inform consumers about product (service) attributes.” (Erdem & Swait 1998:152)

Strategic Implications

The tendency to ignore clients once they have departed from the encounter is endemic to many service businesses that are characterized, primarily, by continuous delivery. These firms should design programs that achieve at the very least the following overall Fallow Phase objectives:

• Maintain high levels of service brand awareness among clients who are in the Fallow Phase, and confirm the positive determining associations that are critical to the client’s selection process.

• Attempt to approach potential new business while the target is in the Fallow Phase.

• Reduce the perceived attraction of individuals within the firm in favor of a positive disposition to the service brand itself.

Future Research Needs

The Fallow Phase theory presents a rich area for new research, in particular these four propositions:

• Customers are more susceptible to persuasive competitive messages during the Fallow Phase than they are during the service encounter.

• Commitment to re-use (of a service provider) decreases exponentially as the distance from the encounter exit increases.

• Most retention and switching decisions will be determined during the Fallow Phase.

• During the Fallow Phase, commitment to a professional service brand is more sustainable than loyalty to individuals within the brand’s environment.

Conclusion

The Fallow Phase represents a dangerous stage in the service cycle because consumers who, at the conclusion of the service encounter were thought to be loyal, might subsequently learn information about service alternatives. This new information might surface when the need for the service next arises prompting the consumer to re-evaluate the service provider and perhaps select a competitor. The incumbent firm might not even know that the business has been lost.

Brand equity theory models the consumer’s knowledge structure (BKS) and attempts to underpin projected longterm cash flows from customers by constantly testing and monitoring this crucial source and managing it to ensure repeat usage. By adopting the newly emerged theory of brand equity, service providers might have available a structured approach to minimizing the apparently enigmatic loss of satisfied customers during the Fallow Phase.

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