Magazine article Journal of Services Research

Key Customer Characteristics for Customer-Oriented Innovation in Australian Financial Services Industry

Magazine article Journal of Services Research

Key Customer Characteristics for Customer-Oriented Innovation in Australian Financial Services Industry

Article excerpt


During the last decade service innovation has emerged as a strategic imperative for most service firms. As a result, New Service Development (NSD) has increasingly attracted the attention of both researchers and practitioners alike and a body of literature has started to emerge (Johne & Storey 1998). One striking feature of this emerging literature is the emphasis on the importance of the role of customers in NSD process. For instance, according to studies about the success factors of new services, customer 1 input and involvement is a critical success factor for new services (for example, de Brentani 1995; Edgett 1994; de Brentani & Cooper 1992; Storey & Easingwood 1993; Cooper & Edgett 1996). This importance of customer involvement has particularly been supported in the literature of new product development (for example, Biemans 1991; Gruner & Homburg 2000).

Despite the above importance of customer involvement, much of the studies have concentrated on investigating the process of NSD and the success and failure factors of new services (for instance Scheuing & Johnson 1989; de Brentani 1995). Although, the related literature specific to new product area has discussed the issue of customer involvement, it yields only partial insight into various aspects of customer involvement because studies vary widely in their elements and scopes (Gruner & Homburg 2000). However, within this fragmented literature of customer involvement, several studies indicate that new product/service success is related to proactive market interpretation rather than merely following the suggestions of customers (for example, Johne & Snelson 1990). Therefore, there is a need to discriminate between different types of customers for the involvement purpose (Johne 1994). Customers that are innovators and experts are likely to be an important information source, while other types of customers are less useful because they suggest only incremental and low risk product change (Johne 1994). Thus, the characteristic and type of customers is a major consideration in customer involvement process and is the subject of investigation in this research. In particular, the purpose of this paper is to investigate the type of customers that should be considered for involvement in NSD. Our empirical study is set in the financial services industry. We selected financial service industry because of the high level of innovation in that industry resulting from deregulation, advances in technology and changes in government policies (de Brentani 1995; 2001). A focus on one industry also enhances internal validity of the research. In addition, this research is delimited to industrial services because business-to-business transactions are, by far, very important in a modern service economy but under-researched (Boyt & Harvey 1997; Jackson & Neidell 1995).

The findings of this research will provide an understanding of the customer characteristics that the service managers should consider in involving customers in their NSD programs. The paper has four sections. We start with the review of extant literature related to customer involvement. Subsequently we describe data collection procedure and discuss our research method. Next, we present the key findings including major implications for the literature and new service managers. We conclude the article with a discussion of limitations and future research directions.


Several literature bases provide an understanding of the manufacturer-customer interaction and shed light on the characteristics of customers. First, we discuss the literature about new product/service development because it yields first insights on the manufacturer-customer interactions. Second, we discuss studies in relationship marketing because collaboration and interactions are key issues in this research. The literature review concludes with a discussion of lead user analysis. …

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