Understanding the role of (dual) entitlement effects on industrial customers’ willingness-to-pay for ancillary services
(A2023-112955)

AUTHORS

Markus Husemann-Kopetzky, Freie Universität Berlin; Andreas Eggert, Freie Universität Berlin; Wolfgang Ulaga, INSEAD; Michael Steiner, University of Witten/Herdecke

ABSTRACT

Manufacturers increasingly pursue servitization strategies, yet their salesforces frequently find that industrial customers display a low willingness-to-pay (WTP) for ancillary services, in particular when offered in conjunction with high-priced capital goods. Drawing on a unique dataset gathered in a field survey among more than 440 executives, we establish a negative relationship between vendors’ equipment prices and their customers’ WTP for ancillary services. In a follow-up experimental study, we investigate the explanatory mechanism and find support for entitlement as the underpinning psychological mechanism. In a second experimental study, we explore dual-entitlement effects and show that customers’ perceptions of vendors’ profitability (in)directly impact their WTP for ancillary services. We establish a theoretical explanation for customers’ WTP for ancillary services and suggest that salesforces adjust their sales scripts to manage customers’ entitlement expectations and WTP.