Selecting Profitable Customers for Complex Services on the Internet
In contrast to books and compact discs, the number of complex services offered on the Internet is still small. The decision-making process for complex services is different because it has an additional intermediate step of "indication of interest." The Web site is (a) visited and searched for information; subsequently, (b) a request for the service is made, which may lead to (c) a purchase. The authors acquired a unique data set from an online Dutch financial service provider, which offers services such as mortgage loans and insurance on the Internet on behalf of financial institutions. They also obtained information on whether the request for the service resulted in a purchase. The authors used the available information to predict the purchase using a latent class probit model. A direct managerial application of this model is the ability to identify and select profitable applicants, resulting in significant profit improvements for the company.
|Keywords||decsion support system, internet, online purchase behavior, prediction|
|Persistent URL||dx.doi.org/10.1177/1094670505276681, hdl.handle.net/1765/13792|
|Series||ERIM Article Series (EAS)|
|Journal||Journal of Service Research|
Vroomen, B.L.K, Donkers, A.C.D, Verhoef, P.C, & Franses, Ph.H.B.F. (2005). Selecting Profitable Customers for Complex Services on the Internet. Journal of Service Research, 8(1), 37–47. doi:10.1177/1094670505276681