Abstract
Developing a strategy for online channels requires knowledge of the effects of customers' online use on their revenue and cost to serve, which ultimately influence customer profitability. The authors theoretically discuss and empirically examine these effects. An empirical study of retail banking customers reveals that online use improves customer profitability by increasing customer revenue and decreasing cost to serve. Moreover, the revenue effects of online use are substantially larger than the cost-to-serve effects, although the effects of online use on customer revenue and cost to serve vary by product portfolio. Self-selection effects also emerge and can be even greater than online use effects. Ignoring self-selection effects thus can lead to poor managerial decision-making.
Original language | English |
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Pages (from-to) | 192-201 |
Number of pages | 10 |
Journal | International Journal of Research in Marketing |
Volume | 29 |
Issue number | 2 |
Early online date | 12 Mar 2012 |
DOIs | |
Publication status | Published - Jun 2012 |
Keywords
- channel management
- online marketing
- matching methods
- product portfolio
- self-selection effects