TY - JOUR
T1 - The Effects of Adopting and Using a Brand's Mobile Application on Customers' Subsequent Purchase Behavior
AU - Kim, Su Jung
AU - Wang, Rebecca Jen Hui
AU - Malthouse, Edward C.
N1 - Funding Information:
We acknowledge support from Northwestern University’s IMC Spiegel Digital and Database Research Center and its Executive Director Tom Collinger. We thank the Air Miles Rewards Program for providing access to their data.
Publisher Copyright:
© 2015 Direct Marketing Educational Foundation, Inc.
Copyright:
Copyright 2016 Elsevier B.V., All rights reserved.
PY - 2015/8/1
Y1 - 2015/8/1
N2 - Mobile applications (apps) have become an important platform for brands to interact with customers, but few studies have tested their effects on app adopters' subsequent brand purchase behavior. This paper investigates whether adopters' spending levels will change after they use a brand's app. Using a unique dataset from a coalition loyalty program with implementations of propensity score matching and difference-in-difference-in-difference methods, we compare the spending levels of app adopters with those of non-adopters. Specifically, we examine whether the use of the app's two main interactive features-information lookups and check-ins-influences adopters' spending levels. We find that app adoption and continued use of the branded app increase future spending. Furthermore, customers who adopt both features show the highest increase. However, we also observe "the recency effect" - when customers discontinue using the app, their spending levels decrease. Our findings suggest that sticky apps which attract continuing uses can be a persuasive marketing tool because they provide portable, convenient, and interactive engagement opportunities, allowing customers to interact with the brand on a habitual basis. We recommend that firms should prioritize launching a mobile app to communicate with their customers, but they should also keep in mind that a poorly designed app, which customers abandon after only a few uses, may in fact hurt their brand experience and company revenues.
AB - Mobile applications (apps) have become an important platform for brands to interact with customers, but few studies have tested their effects on app adopters' subsequent brand purchase behavior. This paper investigates whether adopters' spending levels will change after they use a brand's app. Using a unique dataset from a coalition loyalty program with implementations of propensity score matching and difference-in-difference-in-difference methods, we compare the spending levels of app adopters with those of non-adopters. Specifically, we examine whether the use of the app's two main interactive features-information lookups and check-ins-influences adopters' spending levels. We find that app adoption and continued use of the branded app increase future spending. Furthermore, customers who adopt both features show the highest increase. However, we also observe "the recency effect" - when customers discontinue using the app, their spending levels decrease. Our findings suggest that sticky apps which attract continuing uses can be a persuasive marketing tool because they provide portable, convenient, and interactive engagement opportunities, allowing customers to interact with the brand on a habitual basis. We recommend that firms should prioritize launching a mobile app to communicate with their customers, but they should also keep in mind that a poorly designed app, which customers abandon after only a few uses, may in fact hurt their brand experience and company revenues.
KW - Difference-in-difference-in-difference (DDD) model
KW - Interactivity
KW - Location check-ins
KW - Log data
KW - Mobile app
KW - Propensity score matching
KW - Purchase behavior
KW - Stickiness
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UR - http://www.scopus.com/inward/citedby.url?scp=84940866451&partnerID=8YFLogxK
U2 - 10.1016/j.intmar.2015.05.004
DO - 10.1016/j.intmar.2015.05.004
M3 - Article
AN - SCOPUS:84940866451
SN - 1094-9968
VL - 31
SP - 28
EP - 41
JO - Journal of Interactive Marketing
JF - Journal of Interactive Marketing
ER -