Outsourcing the pain, keeping the pleasure: effects of outsourced touchpoints in the customer journey

To date, outsourcing decisions are mainly based on cost, expertise, or resource-based considerations (see Table 1). In this study, we suggest that consumer perceptions of a touchpoint are also an important factor to consider. Thus, outsourcing a touchpoint might not only be beneficial in situations where third parties can deliver the service cheaper, better, and/or the focal brand wants to focus on its core competencies, but also when consumers perceive the touchpoint as dissatisfying and the brand seeks to avoid an association with that specific touchpoint. Building on this notion, we investigate when firms should use branded outsourcing and when they should rather use their own brand name.

Drawing on Bitner et al.’s (1990) differentiation between favorable and unfavorable touchpoints and Herzberg’s motivation-hygiene theory (Herzberg 1987; Herzberg et al. 1959), we distinguish between satisfier and dissatisfier² touchpoints. Dissatisfier touchpoints are similar to Herzberg’s hygiene factors in that they relate to the core features of a product or service and to consumers’ extrinsic needs (Swan and Combs 1976; Zhang and Von Dran 2000). The performance of such touchpoints needs to adhere to a certain threshold to avoid consumers having a negative experience but have limited upside potential even if consumers have a positive (above expectations) experience (Vargo et al. 2007). For example, consumers presume the installation of a thermostat to be successful and are not delighted when it is. Thus, dissatisfiers decrease consumers’ satisfaction when they are not executed well, but do not contribute to customer evaluations beyond the level of mere satisfaction (Cadotte and Turgeon 1988; Johnston 1995). Thus, their overall effect is either negative (when not executed well) or neutral (when executed well).

Satisfier touchpoints relate to the value enhancing features of a product or service (Vargo et al. 2007). Much like Herzberg’s motivation factors, satisfiers contribute to consumers’ satisfaction when executed well but do not have negative effects when not (Cadotte and Turgeon 1988; Johnston 1995). Thus, the overall effect is either positive (when executed well) or neutral (when not executed well). For example, consumers do not presume that an installation technician will call them afterwards to check if everything works well but are delighted if they receive such a call.

In line with recent literature examining factors that influence the effect of positive and negative (and neutral) touchpoints on customers’ firm evaluations (e.g., Harmeling et al. 2015; Sivakumar et al. 2014), we examine how brand evaluations are influenced by branded (versus unbranded) outsourcing of satisfier (i.e., satisfying touchpoint when executed well, neutral when not) and dissatisfier (i.e., neutral touchpoint when executed well, dissatisfying when not) touchpoints. Before formulating our hypotheses, we will briefly discuss the psychological mechanisms that may underlie these effects. Specifically, we argue and test for two alternative explanations: (1) a reduced deliberate attribution of responsibility of the outsourced touchpoint to the focal brand, and (2) a reduced automatic mental association of the outsourced touchpoint with the focal brand. We conceptualize these explanations in the next two sections.

Attribution is a conscious process triggered especially by negative (but also positive) experiences that leads to emotions and subsequent behavior (Hindriks 2008; Weiner 1995). Most attribution research focuses on self- or other-blame (Cowley 2005; Heidenreich et al. 2015; Hess et al. 2003), but only a limited number of studies has examined the attribution of blame among multiple third parties (such as in our present multi-brand context of branded outsourcing). Perhaps the most relevant paper is the recent work by Carvalho et al. (2015), who find that consumers hold an attribution bias in favor of the brand company and against the (less visible) manufacturer of hybrid products in product harm crises. Based on their findings, it may be expected that branded outsourcing of the management of a particular customer touchpoint may lead to a shift of blame (or positive) attribution from the focal brand to the (more visible) third party. As a result of this attribution, the focal brand should be held less responsible for positive or negative feelings triggered by a touchpoint (Oliver 1993). This prediction is in line with psychological research showing a bias on the overemphasis of salience (Heider 1958; Pryor and Kriss 1977). Thus, the focal brand should be held less responsible for the outsourced touchpoint when the touchpoint is branded with the third party (branded outsourcing) instead of the focal brand itself (unbranded outsourcing). Because responsibility attributions for dissatisfying (satisfying) events lead to negative (positive) evaluations and actions toward the service provider (Van Vaerenbergh et al. 2014; Weiner 1995, 2000), one can expect that holding the third party instead of the focal brand responsible for a dissatisfying (satisfying) outsourced touchpoint will result in a more positive (negative) evaluation of the focal brand.

In addition to the rather conscious and deliberate process discussed above, branded outsourcing of touchpoints may also affect consumers’ evaluations at a more automatic level. This process is described by the literature on brand associations which we will discuss next.

The literature on brand associations argues that consumers form brand attitudes and evaluations by combining and integrating different pieces of information that they deem relevant about a brand (Roedder et al. 2006; Schmitt 2012). Such brand associations are informational nodes stored in consumers’ memory with a link to the brand in general or a brand’s specific product or service (Keller 1993; Ng and Houston 2006). Brand associations can link brands to attributes that are product-related or non-product-related such as places, users, or situations (Keller 1993). One way of triggering the formation of brand associations is through associative learning, in which a valenced association with one stimulus is transferred to another, either via direct affect transfer or via linking both stimuli in memory (e.g., Gawronski et al. 2015; Hofmann et al. 2010; Sweldens et al. 2010). Such learning is commonly used for example in advertising, where brands are repeatedly paired with positive stimuli (Shimp et al. 1991).

From this perspective, each touchpoint in a customer journey can be seen as a valenced stimulus that can create or alter brand associations. When performed under the brand name of a third party, a touchpoint is no longer paired with the focal brand but rather with the third party. As a result, the outsourced touchpoint experienced by a consumer might alter brand associations and evaluations of the focal brand to a lower extent. Instead, the outsourced touchpoint might be associated with the more salient third party. Related research on brand alliances and ingredient branding suggests that spillover effects of brand collaborations are greater for the more salient brand as consumers tend to form stronger brand associations with the respective product or service (Desai and Keller 2002; Simonin and Ruth 1998). Applied to our context of branded outsourcing, this suggests that the third party in branded outsourcing may absorb part of the negative (positive) effects of dissatisfying (satisfying) touchpoints on focal brand evaluations.

Thus, both attribution theory and the brand associations literature suggest that branded outsourcing should weaken the effect of a touchpoint experienced by a consumer on focal brand evaluations. The direction of this attenuating effect depends on the type of touchpoint:

As outlined above, attribution theory and brand associations literature suggest different but potentially simultaneous underlying processes. Attribution theory describes a more deliberate process in which consumers blame or praise the brand that is deemed responsible for the satisfying or dissatisfying touchpoint. On the other hand, the brand associations literature describes a simpler and perhaps even automatic process, in which the touchpoint is associated with the brand that is most salient at the time of delivery. This distinction may have important implications for the way in which brands should communicate about (outsourced) touchpoints. Based on attribution theory, it may for example be valuable to communicate and explain why an outsourced party performed poorly on a dissatisfying touchpoint. Based on the brand associations literature, it might instead be better to simply avoid any communication, because this would prevent consumers from forming an association between the focal brand and the dissatisfying touchpoint.

When using branded outsourcing for a touchpoint, focal brands can often choose between several alternative third parties. There are different theoretical perspectives on whether it is more beneficial to partner with a strong or weak third-party brand. First, ingredient branding and brand alliance research suggests that one important reason for visibly collaborating with another brand is to achieve differentiation by leveraging a partner firm’s brand strength (e.g., Desai and Keller 2002; Park et al. 1996). Park and colleagues (1996), for instance, found that header brands benefit from associations with strong modifier brands in composite brand extensions (e.g., Slim-Fast chocolate cake mix by Godiva). This suggests that in branded outsourcing it may be beneficial to outsource to partners with strong brands. However, information integration theory (Anderson 1974) suggests an alternative perspective. If consumers receive a new piece of information on a brand, they integrate it with their existing associations. If these prior associations are already very strong (e.g., for a strong brand), the new information has a smaller effect on post-associations. Literature on brand alliances concurs and finds that the direct effect of pre-alliance on post-alliance associations and attitudes is much smaller for weak compared to strong brands (Simonin and Ruth 1998).

Applied to our context of branded outsourcing, one could assume that when a dissatisfying touchpoint is outsourced to a weak third-party brand, it is less likely to contradict prior associations. Thus, it is more likely to be associated with the third party instead of the focal brand compared to when it is outsourced to a strong third-party brand for which strong positive prior attitudes exist. As consumers’ strong attitudes are rather stable and difficult to change (Simonin and Ruth 1998), such an inconsistent experience might instead resonate negatively on the focal (outsourcing) firm. On the other hand, when outsourcing a satisfying touchpoint, it is more likely to be associated with the focal brand and not the third party when the third party is a weak (compared to a strong) brand. Based on this rationale, it would thus be more beneficial for a firm to collaborate with a weak rather than a strong third-party brand. In light of these opposing theoretical views, we develop two opposing hypotheses regarding the role of brand strength of the third-party brand in outsourcing.

We thus hypothesize:

We test these hypotheses in three experimental studies and one field study (for an overview of our studies see Table 2). Study 1 assesses the effect of branded outsourcing for a dissatisfying touchpoint (H1a) using field data, while Study 2 replicates this effect in an experimental setting. Study 3 tests the effect of branded outsourcing for both satisfying and dissatisfying touchpoints (H1a and H1b) as well as the mediation hypotheses (H2a and H2b). Lastly, Study 4 analyzes the role of the third party’s brand strength in branded outsourcing (H3a and H3b).

In the survey, customers were first asked whether the recent installation led to the desired result (yes vs. no). We used this measure as an indication of customers’ valence perception of the touchpoint (no = dissatisfying; yes = neutral). Then, customers were asked about their general satisfaction with the energy provider (the focal brand) on a 10-point scale (M = 7.79), followed by an open question on their suggestions for improvement.

We conducted an ANOVA with branded outsourcing (vs. no branded outsourcing) and valence of the touchpoint (dissatisfying/desired result not accomplished vs. neutral/desired result accomplished) as independent variables and satisfaction with the focal brand as dependent variable. We further included the timing of the installation (quarter of the year), the region, and the channel that was used by the consumer to make the appointment (website vs. telephone) as control variables. To ensure comparability, we analyzed only the survey results from regions in which there were both installations branded by the subcontractor (branded outsourcing) and the focal brand (no branded outsourcing; n_{branded outsourcing} = 8042; n_{no branded outsourcing} = 1141). In our sample, most installations were successful (n_neutral = 7438; n_{dissatisfying} = 1745). We estimated our model using a random case bootstrap approach (Chernick 2008; Efron and Tibshirani 1986) with 1000 samples (drawn with replacement from our original sample (n = 9183); each case had a 1/n probability to be selected).³ We find a significant main effect of the valence of the touchpoint (F(1, 9166) = 2178.57, p < .001), as well as branded outsourcing (F(1, 9166) = 5.68, p = .017), and, as expected, a significant interaction effect between the two variables (F(1, 9166) = 8.27, p = .004). We further find significant effects of the timing of the installation (F(1, 9166) = 8.62, p < .001; M_quarter1 = 7.60, SD = 1.95; M_quarter2 = 7.70, SD = 2.07; M_quarter3 = 7.81, SD = 1.92; M_quarter4 = 7.90, SD = 1.99), the channel (F(1, 9166) = 12.77, p < .001; M_website = 7.88, SD = 1.79; M_telephone = 7.74, SD = 1.92), but not of the region (F(1, 9166) = .54, p = .849). Spotlight analyses demonstrated that when the installation touchpoint was dissatisfying and branded outsourcing was used, consumers’ evaluations of the focal brand were more positive compared to when the dissatisfying touchpoint was branded by the energy provider itself (M_{branded outsourcing} = 5.45, SD = 2.68; M_{no branded outsourcing} = 5.12, SD = 2.67; F(1, 9166) = 8.81, p = .003; d = .123). However, we do not find a significant difference in focal brand evaluations when the desired result was obtained during the installation (M_{branded outsourcing} = 8.29, SD = 1.21; M_{no branded outsourcing} = 8.28, SD = 1.22; F(1, 9166) = .18, p = .668; d = .008).

The results of the field experiment confirm that when branded outsourcing is used for a dissatisfying (i.e., not well executed dissatisfier) touchpoint, focal brand evaluations are more favorable compared to when it is performed under the brand name of the focal firm. We do not, however, find an effect of branded outsourcing when the installation led to the desired result (i.e., neutral condition). This result can be explained by the installation being a dissatisfier touchpoint: customers expect it to go smoothly, and when it does so it does not increase satisfaction levels and is perceived rather neutral (Herzberg 1987; Vargo et al. 2007). When a neutral touchpoint is experienced, it is not likely to alter existing brand associations and thus impact focal brand evaluations (e.g., Roedder et al. 2006; Schmitt 2012). On the other hand, when the desired result is not obtained, it is expected to decrease satisfaction levels. Thus, this field data supports H1a.

We set up a pretest in order to determine whether the installation of a thermostat can indeed be characterized as a dissatisfier touchpoint. We employed the Kano methodology to identify satisfier and dissatisfier touchpoints (Kano et al. 1984). Participants were recruited via MTurk (n = 85, mean age = 37.6, 55.0% women) and evaluated the functional (e.g., “The thermostat works after the installation”) and dysfunctional form (e.g., “The thermostat does not work after the installation”) of nine different touchpoints (see Appendix 4), by indicating whether they liked it, disliked it, or were neutral about it. Combining those evaluations for the functional and dysfunctional form, it was determined whether a touchpoint was perceived as a satisfier (functional form: like; dysfunctional form: neutral), dissatisfier (functional form: neutral; dysfunctional form: dislike), or critical (functional form: like; dysfunctional form: dislike). The results confirmed that a successful installation of the thermostat was qualified most often as a dissatisfier (67.1% of respondents), while receiving a call a week after installation to check whether everything works well was classified as a satisfier (55.3% of respondents). Thus, we used the successful installation of the thermostat as an example for a dissatisfier in the main study.

For the main study, we employed a 2 × 2 between-subjects design, in which we manipulated whether a third-party brand was used for a touchpoint or the focal brand (branded vs. unbranded outsourcing) and the dissatisfier touchpoint’s valence (neutral vs. dissatisfying). We recruited 322 US participants via MTurk and randomly assigned them to one of four experimental conditions. In our sample, participants had a mean age of 35.4 years and 40.3% were women.

Participants were presented a scenario in which they had ordered a new smart thermostat from their energy provider (see Appendix 3). In order to install the thermostat at the consumers’ homes the energy provider was described to either send a technician from a third-party subcontractor (branded outsourcing) or one of their own technicians. In the neutral condition, the installation goes smoothly and the thermostat works afterwards. In the dissatisfying condition, the thermostat does not work immediately and the technician needs to come back the following day to fix the problem. Next, participants indicated their attitudes toward the focal brand (Becker-Olsen 2003; α = .98) and—if applicable—to the third party (α = .99) on five-point scales (see Appendix 1 for the exact scales).

We conducted an ANOVA with branded (vs. unbranded) outsourcing and valence of the dissatisfier touchpoint (neutral vs. dissatisfying) as independent variables and attitude toward the focal brand as dependent variable. We find a significant main effect of the valence of the touchpoint (F(1, 318) = 394.20, p < .001), and of branded outsourcing (F(1, 318) = 6.09, p = .014) and, as expected, a significant interaction effect between the two variables (F(1, 318) = 7.95, p = .005). Planned contrasts demonstrated that when the touchpoint was dissatisfying and branded with the third party, consumer evaluations of the focal brand were more positive (M_{branded outsourcing} = 2.73, SD = 1.03; M_{unbranded outsourcing} = 2.23, SD = .92; F(1, 318) = 13.98, p < .001; d = .512). Conversely, when the dissatisfier touchpoint was neutral, evaluations of the focal brand did not differ between outsourcing conditions (M_{branded outsourcing} = 4.33, SD = .67; M_{unbranded outsourcing} = 4.36, SD = .70; F(1, 318) = .06, p = .804; d = .044).

The results of Study 2 replicate the findings from Study 1’s field data. First, our pretest confirms that a successful installation of a thermostat can indeed be characterized as a dissatisfier touchpoint; it is perceived negatively when it does not work and neutrally when it does (Cadotte and Turgeon 1988). Second and in line with the field data, branded outsourcing leads to more positive focal brand attitudes compared to unbranded outsourcing for a dissatisfying touchpoint. The main effect of valence indicates that branded outsourcing does not completely nullify the effect of dissatisfying touchpoints but it does reduce the negative effect on overall focal brand evaluations. When the dissatisfier touchpoint goes smoothly, we again do not find a significant difference in focal brand attitudes between branded and unbranded outsourcing. Thus, we find support for H1a.

We employed a 2 × 2 between-subjects design, in which we manipulated whether a third-party brand was used for a touchpoint (branded vs. unbranded outsourcing) and the touchpoint’s valence (dissatisfying vs. satisfying). We recruited 220 US participants via MTurk and randomly assigned them to one of four experimental conditions. In our sample, participants had a mean age of 37.8 years and 53.0% were women.

Employing the same context as in Study 2, participants again imagined that they ordered a new smart thermostat from their energy provider (see Appendix 3). In order to install the thermostat, the energy provider either sent a technician from a third-party subcontractor (branded outsourcing) or one of their own technicians (unbranded outsourcing). The stimuli for the dissatisfying condition were the same as in Study 2. In the satisfying condition, the installation goes smoothly and the thermostat works afterwards. The technician furthermore calls a week after the installation to check whether everything works fine and whether there are any questions left (this follow-up call has been identified as a satisfier in the pretest conducted for Study 2).

Next, participants indicated their attitudes toward the focal brand (Becker-Olsen 2003; α = .98) and—if applicable—to the third party (α = .99). We also measured participants’ responsibility attributions of the described touchpoint to the focal brand (controllability and locus of control dimensions: Hess et al. 2003; Pick et al. 2016; Tsiros et al. 2004; α = .88). Further, to measure associations of the focal brand with the described touchpoint, we asked participants to indicate to what extent they associate the focal brand with attributes that describe the touchpoint in question (based on the stimuli we deducted the following potential associations: satisfying: successful, caring for customers, great service; dissatisfying: unsuccessful, inconvenient, poor quality). The items measuring the different associations show a high internal consistency (α = .92) and are thus averaged for further analyses. According to Keller (1993), direct measures of brand associations often outperform indirect measures when capturing the strength of associations.

We conducted an ANOVA with branded (vs. unbranded) outsourcing and valence of the touchpoint (dissatisfying vs. satisfying) as independent variables and attitude toward the focal brand as dependent variable. We find a significant main effect of the valence of the touchpoint (F(1, 216) = 366.88, p < .001), but not of branded outsourcing (F(1, 216) = .00, p = .947) and, as expected, a significant interaction effect between the two variables (F(1, 216) = 7.92, p = .005). Analyses of planned contrasts demonstrated that when the dissatisfying touchpoint was branded with the third party, consumer evaluations of the focal brand were more positive compared to when the dissatisfying touchpoint was branded with the energy provider itself (M_{branded outsourcing} = 2.63, SD = 1.14; M_{unbranded outsourcing} = 2.30, SD = .87; F(1, 216) = 4.15, p = .043; d = .325). Conversely, when branded outsourcing was used for the satisfying touchpoint, evaluations of the focal brand were less positive compared to when the touchpoint featured the focal brand (M_{branded outsourcing} = 4.46, SD = .73; M_{unbranded outsourcing} = 4.77, SD = .43; F(1, 216) = 3.77, p = .053; d = .517).

To test whether the effect of branded outsourcing can be explained by attribution of responsibility (H2a) or brand associations (H2b), we performed a moderated mediation analysis with the PROCESS macro (Hayes 2013, model 14), using the responsibility attribution and the brand association measures as parallel mediators (see Fig. 1). We find a significant difference in both the brand association and attribution measure between the branded and unbranded outsourcing conditions. When using branded outsourcing, the focal brand was associated less with the touchpoint compared to when unbranded outsourcing was used (M_{branded outsourcing} = 3.68, SD = 1.12; M_{unbranded outsouring} = 4.13, SD = .89; t(217) = 3.24, p = .001). At the same time, the touchpoint was also attributed to the focal brand to a lesser extent when branded outsourcing was used compared to when the installation was performed under the focal brand (M_{branded outsourcing} = 3.39, SD = 1.11; M_{unbranded outsouring} = 3.75, SD = .95; t(217) = 2.53, p = .012). We find a significant indirect effect of branded outsourcing on the dependent variable via the association measure for both satisfying (indirect effect = −.30, bootstrap 95% confidence interval [CI]: [−.52, −.13]) and dissatisfying touchpoints (indirect effect = .17, bootstrap 95% CI: [.05, .37]). The indirect effect via responsibility attributions is not significant for satisfying touchpoints (indirect effect = −.00, bootstrap 95% CI: [−.05, .02]) and for dissatisfying touchpoints weaker than the effect via associations (indirect effect = .11, bootstrap 95% CI: [.02, .27]). Thus, we find support for the hypothesized automatic brand association process, and only partial support for the responsibility attribution process. Including both variables in the model fully mediates the effect of branded outsourcing on the evaluation of the focal brand (direct effect = −.07, t(217) = −.72, p = .470).⁴

The results of Study 3 support both H1a and H1b. Branded outsourcing increases focal brand evaluations (as compared to unbranded outsourcing) when employed for dissatisfying touchpoints. In contrast, for satisfying touchpoints using branded outsourcing (vs. not) leads to a decrease in focal brand evaluations.

For satisfying touchpoints, this effect cannot be explained by consumers’ responsibility attributions. The mediation analysis instead suggests that consumers associate the focal brand less with the touchpoint in question when branded (compared to unbranded) outsourcing is used. This works in favor of the focal brands’ evaluation when the touchpoint is perceived as being dissatisfying (i.e., the focal brands’ evaluation decreases to a smaller extent). However, it also has a similar distancing effect when the touchpoint experienced is satisfying that leads to less favorable evaluations of the focal brand in case of branded outsourcing. For dissatisfying touchpoints, we find significant indirect effects via both mediators, but the effect via associations is stronger than the effect via attributions. The finding that responsibility attributions only seem to play a role for dissatisfying but not satisfying touchpoints, is in line with attribution research (e.g., Weiner 1995) and the praise-blame asymmetry (Hindriks 2008) stating that people are more likely to ascribe responsibility for a negative than a positive event. Taken together, these results indicate that shifts in brand associations play a larger role in explaining the effects of branded outsourcing than shifts in responsibility attributions.

While it is often expensive and difficult to influence the valence of a touchpoint, managers do have influence over which third party to outsource to. To account for confounding effects, the majority of our findings is based on scenarios involving unknown, fictitious brands. Thus, it is unclear whether the effect of branded outsourcing depends on characteristics of the third party, for instance its brand strength. To gain insight in this effect, the following study will investigate the role of the third party’s brand strength and as a result provide direction on partner brand choices.

We employed a 2 × 3 between-subjects design, in which we manipulated whether a strong or a weak third-party brand was used for a touchpoint (branded outsourcing to a weak vs. strong third-party brand) and the touchpoint’s valence (dissatisfying vs. neutral vs. satisfying). We recruited 604 US participants via MTurk and randomly assigned them to one of six experimental conditions. In our sample, participants had a mean age of 36.3 years, and 46.2% were women.

Participants imagined that they bought a suit at a fictional clothing shop that they already had several good experiences with (i.e., the focal brand was described as a strong brand; see Appendix 3). The suit still needed to be shortened by the tailor service that the clothing shop collaborates with (i.e., the third party). This tailor service was either described as “leading tailor service in your city, it has a very strong reputation, and you have heard many positive things about it.” (strong brand) or as “new in your city and does not have a strong reputation, you have not heard anything positive about it from friends” (weak brand). Following this, the experience during this outsourced touchpoint was described as either dissatisfying, neutral, or satisfying. Next, we employed the same measures for responsibility attributions (Hess et al. 2003; Pick et al. 2016; Tsiros et al. 2004; α = .85) and brand associations (α = .90) as in Study 3, and participants indicated their attitudes toward the focal brand (Becker-Olsen 2003; α = .98) and to the third party (α = .99).

We conducted an ANOVA with the third party’s brand strength (strong vs. weak) and valence of the touchpoint (dissatisfying vs. neutral vs. satisfying) as independent variables and attitude toward the focal brand as dependent variable. We find a significant main effect of the valence of the touchpoint (F(1, 598) = 218.46, p < .001) and the brand strength of the third party (F(1, 598) = 16.01, p < .001; see Fig. 2) and a significant interaction effect between the two variables (F(1, 598) = 5.40, p = .002). When branded outsourcing to a strong third-party brand was used, consumers’ evaluations of the focal brand were more positive compared to when a weak third-party brand was used when the touchpoint was satisfying (M_{weak brand} = 4.30, SD = 0.95; M_{strong brand} = 4.58, SD = 0.61; F(1, 598) = 4.54, p = .034; d = .351) or neutral (M_{weak brand} = 3.73, SD = 0.90; M_{strong brand} = 4.40, SD = 0.72; F(1, 598) = 26.86, p < .001; d = .822). However, when the touchpoint was dissatisfying, consumer evaluations did not differ depending on whether the third party was a strong or weak brand (M_{weak brand} = 2.47, SD = 1.10; M_{strong brand} = 2.49, SD = 1.16; F(1, 598) = 0.35, p = .851; d = .018).

To investigate whether this difference in focal brand attitudes can be explained by differences in focal brand attributions or associations, we again performed a moderated mediation analysis with the PROCESS macro (Hayes 2013, model 7, see Fig. 3). In the satisfying and neutral conditions, we find significant indirect effects via brand associations (satisfying: indirect effect = .26, bootstrap 95% CI: [.16, .38]; neutral: indirect effect = .14, bootstrap 95% CI: [.07, .24]), but not via responsibility attributions (satisfying: indirect effect = .06, bootstrap 95% CI: [−.03, .17]; neutral: indirect effect = .02, bootstrap 95% CI: [−.04, .09]). In the dissatisfying condition, none of the process variables can explain the difference in focal brand evaluations (indirect effect via attributions = −.02, bootstrap 95% CI: [−.13, .07]; indirect effect via associations = .03, bootstrap 95% CI: [−.10, .17]).

The results of Study 4 indicate that it is beneficial for a focal brand to collaborate with a strong rather than a weak third-party brand when using branded outsourcing, unless the touchpoint is dissatisfying. For satisfying and neutral touchpoints, we find that the focal brand is evaluated more favorably when a touchpoint is outsourced to a strong rather than a weak third-party brand. When the touchpoint is dissatisfying, consumer evaluations of the focal brand are not dependent on whether the outsourcing partner has a strong or weak brand. Thus, our results tend to support H3b rather than H3a. Our branded outsourcing perspective thus relativizes findings from literature on brand alliances and ingredient branding that suggest to always partner with preferably strong brands (e.g., Desai and Keller 2002; Park et al. 1996). We find that positive spillover effects from a strong partner brand do not occur when consumers experience a dissatisfying touchpoint. Our findings cannot be explained by differences in responsibility attributions, but again by brand associations. The focal brand gets associated to a larger extent with the outsourced touchpoint when the third party has a strong rather than a weak brand in case of a neutral of satisfying touchpoint. This might be due to consumers appreciating the focal brand’s partner choice and the assumption that the focal brand has thought more carefully about how to manage the touchpoint in question.

This study advances research in three important ways. First, we contribute to research on consumer-based strategy (e.g., Hamilton 2016). Introducing the consumer viewpoint by focusing on consumer perceptions of outsourcing and related branding decisions as posited by Kotabe et al. (2012) is novel and relevant as our results largely contradict recommendations derived from research centered mainly on internal considerations. Brand alliance research (e.g., Desai and Keller 2002) suggests using the brand of a partner firm when it is a strong brand to leverage this brand strength. In contrast, by adopting a consumer-based lens our findings add another important perspective to this discussion and suggest using branded outsourcing for touchpoints that are likely to be perceived as dissatisfying by consumers, while unbranded outsourcing is more beneficial otherwise. We likewise contribute to literature on outsourcing. Specifically, we are the first to introduce consumer touchpoint perceptions as an additional factor for assessing the outsourceability of an activity. This allows us to consider potential demand-side costs and benefits (i.e., consumers’ focal brand evaluations) that have been previously neglected.

The consumer angle further leads us to establish the distinction of branded and unbranded outsourcing. Prior research has found effects of outsourcing on demand-level consequences such as market share (e.g., Kotabe et al. 2012) but it only provides anecdotal evidence that this effect might indeed be driven by direct consumer reactions to outsourcing. By explicitly distinguishing branded from unbranded outsourcing, we can causally test whether differences in focal brand evaluations are indeed driven by consumer perceptions of outsourcing. Further, and relativizing research on brand collaborations (e.g., Desai and Keller 2002; Park et al. 1996), we find that branded outsourcing to a strong third-party brand is not more beneficial for focal brand evaluations than branded outsourcing to a weak third-party brand when a touchpoint is dissatisfying.

Second, we contribute to literature on the role of dissatisfying and satisfying touchpoints (e.g., Harmeling et al. 2015; Van Vaerenbergh et al. 2014) by investigating brand associations as an alternative underlying process next to responsibility attributions. Specifically, our findings show that brand associations can better explain the effect of branded outsourcing than responsibility attributions. Although the focal brand is held less responsible for an outsourced touchpoint in Study 3, this does not explain the effect on focal brand evaluations (in the satisfying condition) and thus contradicts findings from previous attribution research (e.g., Van Vaerenbergh et al. 2014). This might result from the fact that we investigate responsibility attributions in a (for the consumer) more complex situation involving more than one brand.

Third, we contribute to literature on the customer-centric network view of marketing by empirically assessing the impact of a touchpoint performed by a third party on focal brand evaluations. Although we find beneficial (detrimental) effects on focal brand evaluations when using branded outsourcing for dissatisfying (satisfying) touchpoints, we still find main effects of the valence of the touchpoints across all our studies. Thus, although not performed and branded by the focal brand itself, the outsourced touchpoints still influence focal brand evaluations. This finding supports the proposition made by research on service ecosystems (e.g., Vargo and Lusch 2011) which suggests that consumers’ experiences with other firms can also impact focal brand evaluations. We further find that focal brands cannot always transfer their responsibility as perceived by consumers to other firms. Even if it is transferred, it does not necessarily result in a change in focal brand evaluations. However, by dissociating their brand from the touchpoint in question, focal brands can still benefit from including third parties into consumers’ ecosystems.

Our results offer valuable insights for managers both involved in outsourcing decisions and improvements of customer journeys. First, firms should integrate internal and consumer-based considerations when making strategic business decisions. Instead of purely focusing on cost, process, and resource factors when contemplating whether or not to outsource a touchpoint, consumer perceptions of a touchpoint constitute an additional factor that should influence such decisions. When a touchpoint is primarily perceived as dissatisfying by consumers (i.e., it constitutes a “pain point” in the customer journey), branded outsourcing could be a means to dissociate a focal brand from this touchpoint and thus improve firm evaluations. Conversely, managers should likewise be aware of the hidden costs of outsourcing a touchpoint that is perceived as satisfying by consumers, when dissociating it from the focal brand.

Second, when firms have made a decision to outsource a touchpoint (based on consumer perceptions or other internal considerations), they can choose whether to do this branded or unbranded (see Table 1). Based on our results, managers should employ branded outsourcing for touchpoints with a high likelihood of remaining dissatisfying in consumer perceptions. Consequently, branded outsourcing is beneficial for focal brand evaluations for touchpoints with a high failure probability, inherently dissatisfying touchpoints such as payment, but also for touchpoints that have little upside potential (i.e., dissatisfiers). In case a failure happens during those dissatisfier touchpoints, the third party absorbs parts of the negative impact while we do not find a difference in focal brand evaluations when the touchpoint is neutral and outsourced. On the contrary, unbranded outsourcing should be employed for touchpoints that remain or become satisfying in consumers’ perception. Thus, the focal brand should use its own brand name for touchpoints with a low failure rate, inherently positive touchpoints, touchpoints with little downside potential (i.e., satisfiers), those that the third party can perform in a for consumers satisfactory way, and for positive touchpoints that are outsourced based on other internal considerations.

Third, for satisfying and neutral touchpoints managers should collaborate with a third party that has a strong, rather than a weak brand when employing branded outsourcing. For dissatisfying touchpoints in contrast, the brand strength of the third party does not matter. Thus, managers can choose their outsourcing partner based on cost and process considerations instead. Further, when branded outsourcing is used for a dissatisfying touchpoint, firms should refrain from communicating reasons for the unsatisfactory performance or assigning blame to the third party. As the effect of branded outsourcing can be explained by brand associations (rather than responsibility attributions only), firms should avoid any further pairing of their own brand with the dissatisfying touchpoint. Fourth, unbranded outsourcing and no outsourcing are perceived equally by consumers as in both cases they are only exposed to the focal brand during the touchpoint in question (if the outsourcing is not communicated elsewhere). Thus, firms can make a decision between those two options purely based on internal considerations such as costs. Further, firms have the opportunity to switch from one option to the other relatively easy without the customer noticing if conditions change in the future. Fifth, instead of outsourcing to a third-party brand, firms could also create a sub-brand that is used for certain touchpoints. By doing so, firms can combine the dissociative benefits of branded outsourcing with the upside of keeping control over the touchpoint.

Our study has several limitations that can serve as a basis for future research. First, we cannot assess the monetary effect of a branded outsourcing decision. Although we obtained firm data as an important addition to our experimental studies, this data unfortunately also only involves self-reported measures of satisfaction. It would be a valuable path for future research to connect the perception of outsourced touchpoints with actual future purchase data in a context where consumers can easily substitute the focal brands’ products or services (unlike our energy provider context). Further, in this manuscript we purely focus on consumer-level consequences. While it is valuable and important to introduce this angle to the outsourcing literature, it should complement, not substitute internal considerations from strategic and operations management perspectives (e.g., Kakabadse and Kakabadse 2002; Kremic et al. 2006; Prahalad and Hamel 1990). Quantifying both consumer- and firm-level consequences would enable the calculation of a net effect of cost and revenue effects of branded outsourcing decisions.

Second, a touchpoint can be satisfying or dissatisfying because of its execution, or because of an inherent sentiment. Execution-based dissatisfying touchpoints are designed or delivered in an unsatisfactory way: such as an employee who is unfriendly, or a cumbersome delivery process. Inherently dissatisfying touchpoints on the other hand are always perceived negatively independent of their execution: even if it works smoothly, consumers typically do not like to wait or pay for their products (e.g., Prelec and Loewenstein 1998). The touchpoints in our studies all have an execution-based sentiment. It would thus be an interesting path for future research to assess whether the same effects of branded outsourcing apply to touchpoints with an inherent sentiment.

Third, we mainly use fictional brands in our scenario studies and analyze the impact of a for consumers largely unknown third party in the field experiment. As we find an effect of the third party’s brand strength in Study 4, it would be interesting to include other characteristics and consumer perceptions (such as prior experiences or brand personalities) of the parties involved in branded outsourcing in future studies. Further, as we did not include an unbranded outsourcing condition in Study 4 we cannot be certain that unbranded outsourcing is more beneficial for focal firm evaluations when employed for satisfying touchpoints and the third party has a strong brand. Future research could likewise investigate the conditions under which the mechanisms underlying branded outsourcing might change. Apart from brand characteristics, these might be situational or consumer characteristics such as consumers’ ways of processing information. One might expect that responsibility attributions play a greater role in explaining the effect of branded outsourcing when consumers systematically instead of heuristically process a situation.