Selective Demarketing: When Customers Destroy Value

Selective demarketing is a strategic option for a firm to manage customers who are or are likely to be a poor fit with its offering. Research has investigated related areas such as customer profitability and relationship dissolution but, as yet, studies have not offered a robust conceptualization of selective demarketing. Based on research into value co-destruction, this study argues that these customers effectively destroy value by misusing or misunderstanding how to integrate their operant resources with those of the firm. As firms exist within a wider service system, this failure to integrate resonates throughout the system. To demarket selectively, firms should develop and deploy higher order operant resources to disengage with or discourage these customers. This study develops a conceptualization of selective demarketing through adopting a firm and systems perspective derived from value destruction.