Abstract
Purpose Service organizations such as retail banks are attempting to increase their customers' lifetime value through the introduction of service innovations such as integrated banking. To date, these efforts have met with mixed success. This research proposes that strategic consideration of barriers to adoption can significantly alter and enhance the effectiveness of segmentation and communication efforts for service innovations. Designmethodologyapproach The paper utilizes a latent class regression with concomitant variables on a largescale multinational consumer survey n2,702. Findings The results demonstrate that incorporating barriers to adoption significantly alters the segments into which customers are classified, resulting in improved model fit and outofsample prediction. Originalityvalue Future innovations will present other types of barrier. The authors show here that marketers can benefit from managing perceived barriers instead of directly analyzing consumer demographics.