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

Customers’ revenues and decisions to interrupt the relationship with the firm are a central issue in several industries. Literature ascribed to multichannel shopping behavior the potential of enhancing both retention and revenues. We develop a model to investigate this issue, which jointly estimate retention, multichannel shopping, and revenues. The model consists of a three-equation recursive model in which a probit model determines the selection or retention process, and two distinct regression equations characterize multichannel shopping and revenues. We utilize data for a book retailer who operates a subscription-oriented business model, and sells through retail stores, the Internet, and catalog. Our results suggest that indeed multichannel shopping positively affect revenues. Previous multichannel shopping increased the probability of retention. However, consumers who are loyal to the firm might not per se be led to explore multichannel shopping. In addition, direct marketing communications significantly affect retention, multichannel shopping and revenues.