The effect of search channel elimination on purchase incidence, order size and channel choice

This study investigates the impact of eliminating a search channel on purchase incidence, order size, channel choice and, ultimately, sales and profits. We analyze customer panel data from a large retailer over a five-year period. The retailer conducted a randomized field test in which the firm eliminated its catalog for half of the panel. We find that channel elimination decreases purchase incidence, especially for customers who, before the test, were heavy users of the telephone purchase channel that aligns with the catalog search channel. As expected, channel choice for purchases is shifted toward the internet and away from the telephone channel. Interestingly, order size per purchase increases. We investigate the impact of channel elimination on profits across different customer segments. We calculate a net positive impact because the savings from eliminating the catalog compensate for lower sales revenues

Do Multichannel Customers Really Outperform? Retention, Revenues, and Multichannel Usage in a Contractual Setting.

Recent work in marketing suggests that customers shopping across multiple channels tend to be more profitable. However, we know very little about the key drivers of customer profitability in multi-channel shopping contexts. The main purpose of this study is to investigate whether customers who become multi-channel become more profitable as a result. To do so, we develop a model that jointly estimates retention, multi-channel shopping, and revenues. We propose a probit model for retention and multi-channel shopping and a standard right-censored Tobit regression for revenues. We control for selectivity bias through a recursive model that allows error terms between retention, multichannel shopping and revenues to be correlated. Data were obtained from a major European multi-channel retailer. This provides us with a cohort of new customers whose transactions were longitudinally tracked for four-and-a-half years. We find that multichannel shopping behavior increases both customer retention and revenues per customer among the customers who are retained. However, we also find evidence of a controversial role of multi-channel shopping behavior on retention; customers who become multichannel early are more likely to re-new their membership

Identifying omnichannel deal prone segments, their antecedents, and their consequences

Today's retail promotional environment is driven by channel proliferation, customer channel preferences, and managers\u2019 efforts to create a unified \u201comnichannel\u201d customer experience. This paper identifies the omnichannel deal prone segments that emerge in this environment, that is, segments that employ multiple channels to procure and use promotions. We describe these segments, measure the motivations, opportunities, and abilities (MOA) associated with segment membership, and quantify how these segments respond differently to promotions. We apply latent class cluster analysis to a database of over 1,000 respondents in three product categories. We find a rich array of omnichannel deal prone segments. Interestingly, 82% of consumers have bifurcated into online- or offline-focused deal prone segments. That is, most consumers use multiple channels to procure and use promotions, but they focus on either online or offline channels. Only seventeen percent of consumers strongly utilize both online and offline channels. We find that opportunity factors such as access to physical stores, and ability factors such as online shopping experience, explain this finding. We discuss how our results enable managers to target the right promotion designs to the right customers through the appropriate channels

Driving online and offline sales: The cross-channel effects of traditional, online display, and paid search advertising

The current marketing environment is characterized by a surge in multichannel shopping and increasing choice of advertising channels. This situation requires firms to understand how advertising in one channel (e.g., online) influences sales in another channel (e.g., offline). This article studies the presence, magnitude, and carryover of these cross-channel effects for online advertising (display and search) and traditional media. The analysis considers how these advertising expenditures translate directly into sales, as well as indirectly through intermediate search advertising metrics—namely, impressions and clickthrough rate. For a high-end clothing and apparel retailer, the authors find that cross effects exist and are important and that cross-effect elasticities are almost as high as own-effect elasticities. Online display and, in particular, search advertising is more effective than traditional advertising. This result is primarily due to strong cross effects on the offline channel. Return-on-investment calculations suggest that by ignoring these cross effects, firms substantially miscalculate the effectiveness of online advertising. Notably, the authors find that traditional advertising decreases paid search click-through rates, thus reducing the net cross effect of traditional advertising