206 American Marketing Association / Summer 2009 CAN PRIORITIZATION DO HARM? AN EMPIRICAL NVESTIGATION OF THE PREREQUISITES, CRITERIA, AND PERFORMANCE OUTCOMES OF CUSTOMER PRIORITIZATION Hauke A. Wetzel, University of Mannheim, Germany Maik Hammerschmidt, University of Mannheim, Germany Hans H. Bauer, University of Mannheim, Germany SUMMARY It has become common practice to set priorities on the most important customers when allocating marketing resources (Reinartz, Krafft, and Hoyer 2004). Based on the differentiation between “high-tier” and “low-tier” customers, customer prioritization reflects the idea that marketing efforts are specifically focused on high-tier relationships (Lacey, Suh, and Morgan 2007). It is taken for granted that prioritizing high-tier customers leads to higher firm profits. Recent empirical findings lend sup- port to the notion that prioritization pays off (e.g., Hom- burg, Droll, and Totzek 2008). Despite its positive connation customer prioritization is difficult to manage for companies. In this context, two issues are crucial. First, prioritization requires that rela- tional drivers that can be intensified for selected (high- tier) customers exhibit a sufficiently strong influence on loyalty compared to drivers which cannot be designed differentially for individual customers. We refer to the first as relationship specific drivers (RSD) and to the latter as relationship unspecific drivers (RUD) of loyalty. Prioritization clearly seeks to enhance RSD of loyalty. For example, high-tier customers may enjoy premium hotlines, intensified interpersonal interaction with the manufac- turer, and more responsive complaint handling. Such instruments result in enhanced commitment which repre- sents a typical RSD of customer loyalty. However, in a B2B context not all instruments can be differentiated across relationships. For example, technological stan- dards or extended warranties are primarily related to the attractiveness of the core offering and enhance switching barriers which can be viewed as RUD of loyalty. Thus, the relative importance of RSD versus RUD of loyalty is crucial for determining whether prioritization is an appro- priate strategy, as only RSD are available for prioritization. Second, we suggest that the outcome of prioritization initiatives strongly depends on the criterion chosen for selecting high-tier customers. Most companies overesti- mate past performance measures (Homburg, Droll, and Totzek 2008). Consequently, future potential is widely neglected for selecting relationships to be prioritized. We contribute to the literature by answering two fundamental questions of prioritization: (1) whether to prioritize and (2) how to prioritize. Regarding the first research question, we examine the relative importance of RSDs versus RUDs of loyalty. We address our second research question by comparing the performance of two prioritization criteria: a past performance criterion and a future potential criterion. To the best of our knowledge, these critical issues have not been considered in the literature. In addressing them we offer actionable guide- lines for managing the two major stages of the prioritization decision process. We test our conceptual framework by combining survey-based data and profitability data (customer ac- count data) for B2B relationships. More specifically, we have access to these data for low-tier and high-tier cus- tomers. In order to prevent single informant bias we designed our data collection to cover multiple respon- dents per customer. After measurement validation the model is tested using structural equation modeling. Our findings indicate that in a B2B context RUD are at least as important as RSD which are typically focused in relationship marketing literature. Furthermore, the re- sults strengthen prior findings suggesting that prioritization can increase relationship profitability. However, our find- ings also show that the selection criterion is crucial for assuring a successful prioritization. In case of the past performance criterion, we find that for high-tier custom- ers the loyalty-profitability link is negative and for the non-prioritized low-tier customers it is positive. Only for the future potential criterion prioritization is profitable. From a managerial point of view our findings contain several implications. By demonstrating that prioritization can boost the profitability of relationships we encourage managers to follow a prioritization strategy. However, managers have to be aware of the trade-offs when allocat- ing resources across customers. Therefore, prioritization issues have to be carefully scrutinized with respect to their appropriateness, the necessary investments size and the corresponding returns. More precisely, prioritization efforts are periled if the following issues are ignored. First, companies should systematically assess the relative importance of RSD and RUD before considering large scale prioritization initia- tives. In industries where loyalty is primarily influenced