Impact of Online Channel Use on Customer Revenues and Costs to Serve: Considering Product Portfolios and Self-Selection
International Journal of Research in Marketing, Forthcoming
44 Pages Posted: 12 Oct 2011 Last revised: 17 Nov 2011
Date Written: October 3, 2011
Developing a strategy for online channels requires knowledge about the effects of online use on customer revenues and costs to serve, which ultimately influence customer profitability. The authors theoretically discuss and empirically examine these effects. The results of an empirical study, with information about retail banking customers, reveal that online use affects customer profitability positively by increasing customer revenues and decreasing costs to serve. Moreover, the revenue effects of online use are substantially larger than the cost-to-serve effects, though the effects of online use on customer revenues and costs to serve differ across product portfolios. Self-selection effects also emerge and can be even greater than the online use effects. Ignoring self-selection effects thus could lead to inaccurate managerial decisions.
Keywords: channel management, self-selection effect, product portfolio, matching method, online marketing, distribution
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