Events

Dr. Tat Koon KOH
Associate Professor
Department of Information Systems, Business Statistics and Operations Management
The Hong Kong University of Science and Technology

ABSTRACT

Engaging dormant customers can reduce churn and improve revenues. Contrary to the common practice of sending discount-based emails to dormant customers, this study proposes showing product recommendations in (nondiscount) emails to engage them. Although recommendations can be inaccurate when firms lack updated data to infer dormant customers’ prevailing needs, we theorize that showing recommendations in email marketing can nonetheless trigger their interest in exploring firms’ products and improve campaigns’ click rate. We further submit that those who click in the campaigns will more likely exhibit favorable post-campaign behaviors. We test our theorizing using two experiments. In an experiment on Amazon Mechanical Turk, when a set of products was presented as recommendations in a hypothetical marketing email, dormant customers were more interested in exploring the firm’s products, including those that had not been recommended. In a field experiment with a global consumer electronics brand, including product recommendations in an email marketing campaign for dormant customers increased the click rate. Furthermore, those who clicked in the campaign were more likely to (1) open and click in subsequent email communications and (2) purchase. Interestingly, although the recommendations in the experiments were likely or mostly inaccurate, they still effectively engaged dormant customers.