Scoring models predict responses to some contact that will be made in the future, helping an organization decide which customers to target. They are usually built from a single "proxy" contact from the past, for which responses have already been observed. This approach is risky because there could be differences between the proxy and future contact, and other exogenous factors could have changed. We propose averaging predictions from multiple scoring models and develop a rationale for this approach by showing under certain assumptions that the expected squared difference between the true responses to the future contact and the predicted values from the averaged model is less than or equal to the expected squared difference from a single previous contact. The improvement of the aggregated model over the single model increases as (1) the variation in effect sizes across contacts increases, (2) the number of averaged contacts increases, and (3) the variance of the effect estimates increases. We incorporate the effects of external factors in our model by weighting the coefficients with a general linear model (GLM). Using data from a retail catalog company and a nonprofit organization,we evaluate our model empirically by testing whether our assumptions hold, examine the extent of variation in slopes and predicted values across models build from various previous contacts, evaluate the amount of improvement over extant models in terms of prediction error and performance as measured by a gains table, and study how improvement depends on the number of averaged contacts. Conservative estimates suggest that our method could increase annual profits for the nonprofit organization by over a half-million dollars and tens of thousands of dollars for the small catalog company.
Virtual try-on technology (referred to in this article as Virtual Try-on) can deliver product information that is similar to the information obtained from direct product examination. In addition, the interactivity and customer involvement created by Virtual Try-on can enhance the entertainment value of the online shopping experience. We used focus group interviews and an online national survey to investigate online apparel shoppers’ use of Virtual Try-on to reduce product risks and increase enjoyment in online shopping.We also examined the impact of two important external variables (innovativeness and technology anxiety) that are not included in the electronic Technology Acceptance Model (e-TAM) but were expected to influence adoption of Virtual Try-on and whether or not gender differences existed in the Virtual Try-on adoption process. We examined this dual (functional and hedonic) role of Virtual Try-on by applying a modified e-TAM model to the Virtual Try-on technology adoption process and tested model invariance among male and female shoppers using Virtual Try-on in a simulated online shopping experience. The extended research model was validated in the context of Virtual Try-on adoption.Technology anxiety and innovativeness had significant moderating effects on the relationship between attitude and use of Virtual Try-on technology; however, there was no significant gender difference in the overall adoption process for Virtual Try-on.
Free, content-oriented Web sites depend on advertising revenues that are based on the number of visitors to the site. To induce visitors to acquire information quickly, these sites present information items according to their popularity. We empirically examine two key determinants of a visitor's inter-acquisition time (popularity and the number of information items previously acquired by the visitor) using a hazard model estimated from data obtained from del.icio.us, a social bookmarking site. The results indicate that inter-acquisition times are longer for heavy users and for less popular information items. The results are relevant for other free content-providing sites such as cnet.com and music.yahoo.com .
We examine the effect of reference prices on consumer bidding behavior in interactive pricing mechanisms used in online retailing, e.g., auctions and name-your-own-price. We find significant influences of different reference price concepts on bid values. However, after controlling for internal and external reference prices, sellers only have a moderate ability to affect bid values via the provision of an advertised reference price. An exaggerated advertised reference price increases the bid value among consumers who consider it to be believable. However, its effect is reversed in the presence of an external reference price if consumers consider it unbelievable, decreasing bid values.
We suggest that online dating frequently fails to meet user expectations because people, unlike many commodities available for purchase online, are experience goods: Daters wish to screen potential romantic partners by experiential attributes (such as sense of humor or rapport), but online dating Web sites force them to screen by searchable attributes (such as income or religion). We demonstrate that people spend too much time searching for options online for too little payoff in offline dates (Study 1), in part because users desire information about experiential attributes, but online dating Web sites contain primarily searchable attributes (Study 2). Finally, we introduce and beta test the Virtual Date, offering potential dating partners the opportunity to acquire experiential information by exploring a virtual environment in interactions analogous to real first dates (such as going to a museum), an online intervention that led to greater liking after offline meetings (Study 3).
Safety cues are frequently used in online stores to relieve consumers’ risk perceptions concerning online purchases. This paper uses regulatory focus theory (RFT) to predict the persuasiveness of online safety cues. According to RFT (Higgins, 1997), people process information differently depending on whether they strive for achieving gains (promotion focus) or avoiding losses (prevention focus). The aim of the present study is to examine the impact of the regulatory focus compatibility of Web content on online consumer behavior. Using different online stores, two experiments show that the effect of online safety cues depends on the consumers'regulatory focus. A pilot study demonstrates that safety-oriented Web content lowers consumers’ risk perceptions, but only when in a prevention focus. The main study replicates and extends this finding by showing that online safety cues both lower consumers’ risk perceptions and engender more favorable attitudes and intentions, depending on the regulatory focus.
We investigate the nature and extent of enjoyment experienced by users of the Web by developing an instrument for the measurement of this new construct. We establish the reliability and validity of the instrument through a range of psychometric tests. We show that the instrument may have both managerial and theory-building applications in predicting and explaining Web users' attitudes, experiences, and behaviors.
Consumers have become increasingly savvy about technology in recent years, and many of them ignore Web ads during online activities. In this context, measuring advertising effects based on the traditional cognitive models of information processing may undervalue the effectiveness of Web ads. This study experimentally examined the effects of unconscious processing of Web ads by manipulating the level of attention paid to the ad (directed vs. non-directed attention). Online advertisers should be encouraged by the findings of this study. The results suggest that, upon exposure to Web ads, consumers experience priming caused by implicit memory and build a more favorable attitude toward the advertised brand regardless of the levels of attention they paid to the advertisements. Furthermore, those who unconsciously processed Web ads did not remember seeing the ad explicitly, but they were more likely to include the advertised brand in the consideration set than those who had no exposure.
This research examines the impact of communication frequency on customer retention and spending and thus, ultimately, on a firm's Customer Equity (CE). We conduct an empirical study in the context of permission-based e-mail marketing in the entertainment industry and find that intercommunication timing has a dramatic impact on customer behavior. Message scheduling affects both attrition and the customer response and thus has a critical impact on the value of one's customer base. The impact of intercontact duration is asymmetric in that too long intercommunication time is less problematic than too short intercommunication time.
E-mail is a powerful communication tool for marketers. Unfortunately, the efficacy of this tool is rapidly being eroded by spam. In response, one option now in play for legitimate marketers is to subscribe to services that charge postage for delivery of e-mail. This solution is consistent with economic theory and essentially amounts to a tax to reduce the supply of unwanted communications. However, it fails to harness the unique nature of the e-mail communication medium— namely, its “interactivity.” A solution that utilizes the interactivity of the e-mail medium, but less commonly known, is bonded senders . It involves the posting of a bond with an intermediary that is forfeited if the recipient identifies the e-mail as an unwanted communication. Given the emergence of these two distinct pricing solutions, we ask: (1) What are the essential characteristics of each pricing solution? (2) Which pricing solution is superior? and (3) Is it sustainable without regulation? Our analytical findings reveal that the bonded senders solution dominates the postage stamp solution. Specifically, it allows marketers in more categories to participate and yields greater profit to each marketer. Surprisingly, despite offering these benefits to marketers, it also results in a lower amount of unwanted communications. Finally, incorporating the notion of rational expectations, we also find that only bonded senders emerge as a solution that is self-enforcing. Our analytical findings thus give pause to pure postage-type mechanisms but encourage investments in the bonded senders mechanism.
In light of mature markets and increasing competitive pressure, retaining the existing customer base becomes crucial for the future success of a firm. As a consequence, firms are increasingly interested in understanding the factors influencing and driving customer retention. One factor that is hypothesized to have an impact on customer retention is the growing use of the Internet channel. Firms are interested in understanding whether and how the Internet use induces a change in customer retention. The aim of this paper is to empirically quantify the impact of Internet use on customer retention when accounting for potentially present self-selection. Furthermore, the paper will derive managerial implications on how to use customer channel migration to improve overall customer retention. The results of the empirical study indicate a strong positive impact of Internet use on customer retention. Hence, migrating customers to the Internet channel has the potential to increase overall retention rates.
This paper explores the assimilation of electronic channels into consumers'routines. It proposes that consumer learning orientation for the product/service and the efficiency realized from channel use are essential determinants of post-trial assimilation and that assimilation reduces information ambiguity and improves consumers’ sense of identity with the firm. These relationships are tested using data from a survey of online banking customers. The study reveals that consumer efficiency and learning orientation influence assimilation more strongly than some other determinants of consumer trial and that assimilation improves consumers’ understanding of the service and facilitates a greater sense of identity with the firm. Theoretical implications are discussed and suggestions are presented on how managers can increase the rate of customer electronic channel assimilation and how to take strategic advantage of this.
E-mail is a powerful communication tool for marketers. Unfortunately, the efficacy of this tool is rapidly being eroded by spam. In response, one option now in play for legitimate marketers is to subscribe to services that charge postage for delivery of e-mail. This solution is consistent with economic theory and essentially amounts to a tax to reduce the supply of unwanted communications. However, it fails to harness the unique nature of the e-mail communication medium-namely, its "interactivity." A solution that utilizes the interactivity of the e-mail medium, but less commonly known, is bonded senders. It involves the posting of a bond with an intermediary that is forfeited if the recipient identifies the e-mail as an unwanted communication. Given the emergence of these two distinct pricing solutions, we ask: (1) What are the essential characteristics of each pricing solution? (2) Which pricing solution is superior? and (3) Is it sustainable without regulation? Our analytical findings reveal that the bonded senders solution dominates the postage stamp solution. Specifically, it allows marketers in more categories to participate and yields greater profit to each marketer. Surprisingly, despite offering these benefits to marketers, it also results in a lower amount of unwanted communications. Finally, incorporating the notion of rational expectations, we also find that only bonded senders emerge as a solution that is self-enforcing. Our analytical findings thus give pause to pure postage-type mechanisms but encourage investments in the bonded senders mechanism.
Cross-buying (i.e., the purchase of products from multiple categories) has been associated with higher levels of customer retention, revenue generation, and loyalty. Despite these claims, debate remains as to whether cross-buying is an antecedent to such behaviors or if loyalty behaviors represent the antecedent, with cross-buying as a consequence. This research investigates the direction, strength, and nature of the relationship between customers' cross-buying behavior and associated behavioral outcomes by using a Granger-type causality modeling and two data sets. The authors determine that cross-buying is a consequence and not an antecedent of behavioral loyalty. Specifically, behavioral loyalty drives both the number of categories from which a person buys and the level of spending dispersion across those categories. These findings have significant implications for cross-selling strategies.
We develop hypotheses about the effects of the dimensions (innova-tiveness, optimism, discomfort, and insecurity) of technology readiness on two key stages of Internet acceptance, adoption, and usage of different Internet-based activities, and test them through a two-stage model using U.S. consumer survey data. The findings show that these dimensions have significant enduring effects on the two stages at varying levels of perceived risk.
We investigate consumer preference for online versus offline purchasing of a complex service (home mortgage), across the three stages of purchasing namely, pre-purchase, purchase, and post-purchase. Our analysis of data from 300 consumers shows that (1) the offline channel is generally preferred over the online channel across all the stages, and (2) the channel usage intention in a particular stage is moderated by the consumer's Internet experience. Specifically, in both the pre- and post-purchase stages, the usage intention for the online channel is higher when consumers have more favorable Internet experience. In the purchase stage, consumers prefer the offline channel over the online channel, regardless of their Internet experience. Furthermore, we find that the drivers of channel preference are substantially different across the three buying stages due to (in)congruities between channel benefits desired and channel capabilities offered.
While the recent international surveys conducted by Barwise and Farley (2005) have led them to claim that e-Marketing (eM) is “starting to come of age,”rdquo; there has been little empirical research about eM's actual impact on marketing practice and performance. We investigate this underresearched area using survey data from U.S. firms collected in 2002 ( n = 212) and 2005 ( n = 139). Our results confirm Barwise and Farley's finding that there has been an increase in the penetration of eM. We also show that the adoption of eM is positively associated with performance, which supports Day and Bens (2005) contention that firms adopting eM are likely to have competitive advantage. The success of eM largely comes from the support and enhancement of existing marketing practices, so the “coming of age” of eM is, to a large extent, a consequence of its integration with other marketing practices.
The growing popularity of online product review forums invites the development of models and metrics that allow firms to harness these new sources of information for decision support. Our work contributes in this direction by proposing a novel family of diffusion models that capture some of the unique aspects of the entertainment industry and testing their performance in the context of very early postrelease motion picture revenue forecasting. We show that the addition of online product review metrics to a benchmark model that includes prerelease marketing, theater availability and professional critic reviews substantially increases its forecasting accuracy; the forecasting accuracy of our best model outperforms that of several previously published models. In addition to its contributions in diffusion theory, our study reconciles some inconsistencies among previous studies with respect to what online review metrics are statistically significant in forecasting entertainment good sales.
Price is an important factor affecting consumer preference for online brands and, not surprisingly, has played a dominant role in the Internet marketing literature. Concurrently, important nonprice factors that account for individual online brand preferences have received scant attention. This research examines nonprice influences on preferences for online brands and demonstrates that brand character, brand offerings, prior Internet shopping experience, brand familiarity, and brand evaluation affect online brand preference. Using data from cyber and extension brands, our results show that influences on consumer preference for the types of brands examined are different. In the case of cyber brands, familiarity, character, and brand offerings are related to brand preference. In contrast, extension brands benefit from having market-based counterparts, and for these firms, brand familiarity is not a predictor of consumer preference. Breadth of offerings is the most important predictor for both cyber- and extension-brand preference. Future research and managerial implications are discussed.
Evidence from traditional service settings shows that service quality is a major driver of customer satisfaction, trust, and loyalty, which ultimately lead to profitability. Regarding business on the Internet, many argue that trust and loyalty become even more important for long-term success. But does quality play the same influential role in the context of Web-based services, where it is said that price is king and competitors just one click away? In the present study, the authors develop a structural equation model that links Web-based service quality to a broad set of consequences. The model is tested with a large sample drawn from three different Web-based service domains. The results provide insights into the mechanisms leading from Web-based service quality to outcome variables. Specifically, they point to a multifaceted chain of effects, with trust playing a key mediating role.
