Abstract
Customer engagement, a customer’s active participation in and connection with a firm’s services, has been promoted as a key driver of customer loyalty. Yet, insights on how to effectively manage engagement are scarce. This article employs an experimental study to assess the loyalty effect of customer engagement and disentangle the effectiveness of company-initiated versus customer-initiated engagement for different customer types. We establish a positive impact of customer engagement on customer loyalty, mediated by company image. However, adopting a finer-grained view on engagement effectiveness, we show mixed effects of company-initiated engagement contingent on customers’ service category involvement. Specifically, for high involvement customers, company-initiated engagement positively affects loyalty, while it impedes loyalty for low involvement customers. Company image and reactance toward the company act as mediating mechanisms. We provide guidance to managers on how to design and whom to target with their engagement strategies.
