Determining the impact of Internet channel use on a customer's lifetime

Authors


Abstract

In light of mature markets and increasing competitive pressure, retaining the existing customer base becomes crucial for the future success of a firm. As a consequence, firms are increasingly interested in understanding the factors influencing and driving customer retention. One factor that is hypothesized to have an impact on customer retention is the growing use of the Internet channel. Firms are interested in understanding whether and how the Internet use induces a change in customer retention.

The aim of this paper is to empirically quantify the impact of Internet use on customer retention when accounting for potentially present self-selection. Furthermore, the paper will derive managerial implications on how to use customer channel migration to improve overall customer retention. The results of the empirical study indicate a strong positive impact of Internet use on customer retention. Hence, migrating customers to the Internet channel has the potential to increase overall retention rates.

Ancillary