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EMAC 2022 Annual

Managing Customer Relationships While Providing for Customer Wellbeing

Published: May 24, 2022


Agata Leszkiewicz, UNIVERSITY OF TWENTE; V. Kumar, Indian School of Business; Angeliki Herbst, California State University


Physical activity contributes to overall health and wellbeing. Despite the growth of this industry, customer retention is a concern for fitness clubs. What creates challenges for churn prediction, is the fact that customer-firm relationships can be contractual or noncontractual. Using a dataset containing customer’s purchases and attendance at the fitness club, we show that customer wellbeing and revenues are interrelated. We examine the dynamics of customer-firm relationships, assuming that customer latent commitment states are manifested through customer purchases, as well as usage levels. To this end, we estimate a hidden Markov model incorporating the dependency between the revenues and usage.