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Nudges as Conversion Funnel Enhancers in Digital Business Models

Koch, Oliver Francis (2017)
Nudges as Conversion Funnel Enhancers in Digital Business Models.
Technische Universität Darmstadt
Dissertation, Erstveröffentlichung

Kurzbeschreibung (Abstract)

By leveraging the technological advancements in information, communication, and connectivity technologies, specifically the internet, firms continue to innovate and create value through new digital business models which are disrupting entire industries. More recent success stories include Spotify, a music streaming service which has transformed the way music is consumed and has disrupted the entire music retail industry as well as Dropbox, which has been attributed a similar disruptive role in regards to consumer file storage. However, competition and distraction in the online space are fierce and consumers often expect products and services on the internet to be free, urging firms to rethink the design of their conversion funnel to win new customers and thus capture the value they create. The conversion funnel describes the transformation users undergo when sequentially proceeding through four stages to ultimately complete an online transaction with the firm: from being a non-visitor to becoming a visitor (also called acquisition), to becoming a registered user (also called activation) and lastly a converted customer (also called customer conversion). While Information Systems (IS) research on the conversion funnel of digital business models has dealt quite extensively with the antecedents of consumer decision making in all parts of the funnel, big questions remain as to how firms may actively shape desired outcomes in regards to acquisitions and customer conversions. Research on acquisitions has emphasized that traditional advertising is becoming less effective due to media saturation and consumers wanting to rely on more credible sources when seeking information on new products and services. This has lead mechanisms such as referrals, which relate to passing along messages received by the marketer to one’s peers, to become a critical component of marketing strategy. However, extant contributions have focused on the antecedents of consumer referral decisions, leaving a big gap as to how firms may actually enhance referrals and thus improve acquisition outcomes. Similarly, research on customer conversions has mainly focused on identifying the antecedents of consumer decision making at the neglect of shedding light on how one may actually shape conversion outcomes. On the other hand, IS research on activations is quite mature and has paid attention to both the antecedents of consumer decision making as well as how firms may drive better activation outcomes. Digital nudging, which refers to the practice of using visual user interface elements to influence consumer behavior in digital choice environments, has shown promising results in driving activation outcomes in this regard. For example, the usage of pull vs. push mechanisms in requesting information to consumers may influence their privacy concerns and thus activation outcomes. However, digital nudges have so far been widely ignored in the context of acquisition and customer conversions. Against this backdrop, three studies were conducted. The first study, by drawing on a randomized field experiment in the context of an online fashion service named StyleCrowd, investigates the effect of scarcity and personalization nudges in enhancing consumer referrals and thus improving acquisition outcomes. Building on this, the second study is focused on examining the potential of scarcity and social proof nudges as referral enhancers in the context of a randomized online experiment with the German startup Blinkist. Lastly, the third study examines how free trial order nudges may be used to enhance customer conversions within freemium business models by drawing on a contest-based online experiment. Overall, this thesis expands our understanding of how digital nudges may be used to enhance acquisition and conversion outcomes within the conversion funnel of digital business models. On the acquisition end, we provide evidence of how scarcity, social proof as well as personalization nudges may increase consumers’ propensity to engage in referrals and explicate the drivers that mediate these effects. Furthermore, we also shed light on the positive interaction effects between scarcity and social proof as well as the negative interaction effects between scarcity and personalization, and provide explanations for these phenomena. On the customer conversion end, we demonstrate how free trial order nudges may be used to enhance premium conversion within freemium business models. Besides unveiling the drivers that mediate this positive effect, we also explicate external factors that act as moderators. In sum, the contributions of this thesis are not limited to digital business models and digital nudges, but also extend into IS and marketing research on electronic word of mouth as well as research on cognitive biases. From a practical perspective, firms may leverage our findings for the design of their conversion funnel by carefully employing digital nudges to enhance acquisition and conversion outcomes.

Typ des Eintrags: Dissertation
Erschienen: 2017
Autor(en): Koch, Oliver Francis
Art des Eintrags: Erstveröffentlichung
Titel: Nudges as Conversion Funnel Enhancers in Digital Business Models
Sprache: Englisch
Referenten: Benlian, Prof. Dr. Alexander ; Carolin, Prof. Dr. Bock
Publikationsjahr: 2017
Ort: Darmstadt
Datum der mündlichen Prüfung: 28 März 2017
URL / URN: http://tuprints.ulb.tu-darmstadt.de/6008
Kurzbeschreibung (Abstract):

By leveraging the technological advancements in information, communication, and connectivity technologies, specifically the internet, firms continue to innovate and create value through new digital business models which are disrupting entire industries. More recent success stories include Spotify, a music streaming service which has transformed the way music is consumed and has disrupted the entire music retail industry as well as Dropbox, which has been attributed a similar disruptive role in regards to consumer file storage. However, competition and distraction in the online space are fierce and consumers often expect products and services on the internet to be free, urging firms to rethink the design of their conversion funnel to win new customers and thus capture the value they create. The conversion funnel describes the transformation users undergo when sequentially proceeding through four stages to ultimately complete an online transaction with the firm: from being a non-visitor to becoming a visitor (also called acquisition), to becoming a registered user (also called activation) and lastly a converted customer (also called customer conversion). While Information Systems (IS) research on the conversion funnel of digital business models has dealt quite extensively with the antecedents of consumer decision making in all parts of the funnel, big questions remain as to how firms may actively shape desired outcomes in regards to acquisitions and customer conversions. Research on acquisitions has emphasized that traditional advertising is becoming less effective due to media saturation and consumers wanting to rely on more credible sources when seeking information on new products and services. This has lead mechanisms such as referrals, which relate to passing along messages received by the marketer to one’s peers, to become a critical component of marketing strategy. However, extant contributions have focused on the antecedents of consumer referral decisions, leaving a big gap as to how firms may actually enhance referrals and thus improve acquisition outcomes. Similarly, research on customer conversions has mainly focused on identifying the antecedents of consumer decision making at the neglect of shedding light on how one may actually shape conversion outcomes. On the other hand, IS research on activations is quite mature and has paid attention to both the antecedents of consumer decision making as well as how firms may drive better activation outcomes. Digital nudging, which refers to the practice of using visual user interface elements to influence consumer behavior in digital choice environments, has shown promising results in driving activation outcomes in this regard. For example, the usage of pull vs. push mechanisms in requesting information to consumers may influence their privacy concerns and thus activation outcomes. However, digital nudges have so far been widely ignored in the context of acquisition and customer conversions. Against this backdrop, three studies were conducted. The first study, by drawing on a randomized field experiment in the context of an online fashion service named StyleCrowd, investigates the effect of scarcity and personalization nudges in enhancing consumer referrals and thus improving acquisition outcomes. Building on this, the second study is focused on examining the potential of scarcity and social proof nudges as referral enhancers in the context of a randomized online experiment with the German startup Blinkist. Lastly, the third study examines how free trial order nudges may be used to enhance customer conversions within freemium business models by drawing on a contest-based online experiment. Overall, this thesis expands our understanding of how digital nudges may be used to enhance acquisition and conversion outcomes within the conversion funnel of digital business models. On the acquisition end, we provide evidence of how scarcity, social proof as well as personalization nudges may increase consumers’ propensity to engage in referrals and explicate the drivers that mediate these effects. Furthermore, we also shed light on the positive interaction effects between scarcity and social proof as well as the negative interaction effects between scarcity and personalization, and provide explanations for these phenomena. On the customer conversion end, we demonstrate how free trial order nudges may be used to enhance premium conversion within freemium business models. Besides unveiling the drivers that mediate this positive effect, we also explicate external factors that act as moderators. In sum, the contributions of this thesis are not limited to digital business models and digital nudges, but also extend into IS and marketing research on electronic word of mouth as well as research on cognitive biases. From a practical perspective, firms may leverage our findings for the design of their conversion funnel by carefully employing digital nudges to enhance acquisition and conversion outcomes.

Alternatives oder übersetztes Abstract:
Alternatives AbstractSprache

Der Fortschritt in Informations-, Kommunikations- und Verbindungstechnologien, angetrieben durch das Internet, setzt Firmen in die Lage, durch Innovationen und neue wertschöpfende Geschäftsmodelle ganze Industrien zu revolutionieren. Zu den Erfolgsgeschichten der jüngeren Vergangenheit zählt beispielsweise Spotify, ein Musikstreaming-Service, der die Art und Weise wie Nutzer Musik konsumieren revolutioniert hat. Im Bereich Cloud-Datenspeicherung für Konsumenten hat das Unternehmen Dropbox ähnliche Veränderungen angestoßen. Der Konkurrenzdruck im Onlinebereich ist jedoch extrem hoch und Konsumenten werden mit Werbebotschaften regelrecht überflutet. Um den generierten Mehrwert durch die Neugewinnung von Kunden abschöpfen zu können, sind Onlineunternehmen gezwungen, ihren sogenannten “Conversion Funnel” grundlegend zu überdenken und kontinuierlich zu verbessern. Der Conversion Funnel beschreibt den vierstufigen Prozess, den Nutzer bis zum Abschluss einer Online-Transaktion durchlaufen: Vom Unbekannten zum Besucher (Acquisition), vom Besucher zum registrierten Nutzer (Activation) und schließlich vom registrierten Nutzer zum konvertierten Kunden (Customer Conversion). Während das Entscheidungskalkül von Konsumenten in allen Stufen des Conversion Funnels digitaler Geschäftsmodelle in der bisherigen Wirtschaftsinformatikforschung bereits intensiv untersucht wurde, bleiben bislang viele Fragen dahingehend offen, ob und wie Unternehmen bezüglich Acquisitions und Customer Conversions bessere Ergebnisse herbeiführen können. Frühere Forschungsarbeiten im Bereich Acquisitions zeigen, dass durch die Reizüberflutung von Konsumenten traditionelle Werbung an Bedeutung verliert und Unternehmen sich stärker auf Weiterempfehlungen (auch Referrals genannt) fokussieren sollten. Dies ist vor allem darauf zurückführen, dass Konsumenten Personen aus ihrem Netzwerk als vertrauenswürdigere Informationsquellen einstufen. Bisherige Forschungsbeiträge beschäftigen sich zwar mit dem Entscheidungskalkül des Konsumenten bei der Weiterempfehlung, lassen jedoch eine aktive Einwirkung des Unternehmens außer Acht. Analog wurden auch Conversions mit Fokus auf den Entscheidungsprozess des Konsumenten, jedoch ohne die Betrachtung von Einflussmöglichkeiten seitens des Unternehmens untersucht. Im Gegensatz dazu wurde in der Forschung zu Activations sowohl das Entscheidungskalkül des Konsumenten als auch der Aktionsradius des Unternehmens untersucht sowie Optimierungsmaßnahmen abgeleitet. In diesem Kontext haben digitale Nudges - das Nutzen virtueller Benutzeroberflächenelemente zur Beeinflussung des Konsumentenverhaltens in digitalen Entscheidungsarchitekturen - bereits vielversprechende Ergebnisse vorweisen können. Beispielsweise konnte gezeigt werden, dass der Einsatz von pull statt push Mechanismen beim Abfragen von Konsumenteninformationen Sorgen um die Privatsphäre lindern und somit auch Registrierungsentscheidungen beeinflussen kann. Allerdings wurden digitale Nudges im Kontext von Acquisitions und Customer Conversions in der bisherigen Forschung bislang weitgehend ignoriert. Um diese Lücke zu schließen wurden im Rahmen dieser Dissertation drei Studien durchgeführt. Die erste Studie, die auf Acquisitions fokussiert ist, untersucht den Einfluss von Verknappungs- und Personalisierungsnudges auf die Weiterempfehlungentscheidung von Konsumenten anhand eines randomisierten Feldexperiments im Kontext eines online Mode Services namens StyleCrowd. Darauf aufbauend betrachtet die zweite Studie das Potenzial von Verknappungs- und Popularitätsnudges (auch Social Proof Nudges genannt) für die Verbesserung von Weiterempfehlungen im Rahmen eines randomisierten OnlineExperiments, welches in Kooperation mit dem deutschen Startup Blinkist durchgeführt wurde. Abschließend untersucht die dritte Studie wie Produktprobenudges genutzt werden können, um Customer Conversions in Freemium Geschäftsmodellen zu verbessern. Insgesamt liefert diese Arbeit neue Erkenntnisse darüber, wie digitale Nudges zur Verbesserung von Acquisitions und Customer Conversions im Conversion Funnel digitaler Geschäftsmodelle genutzt werden können. Im Bereich Acqusitions zeigen die Ergebnisse, wie Verknappungs-, Popularitäts- und Personalisierungsnudges die Neigung des Konsumenten zur Weiterempfehlung des Produkts oder Services steigern können und welche Faktoren diese Effekte erklären. Weiterhin werden die positiven Interaktionseffekte zwischen Verknappungsund Bekanntheitsnudges sowie die negativen Interaktionseffekte zwischen Verknappungsund Personalisierungsnudges beleuchtet und erklärt. Im Bereich Customer Conversion zeigt die dritte Studie wie Produktprobenudges genutzt werden können, um Customer Conversion im Rahmen von Freemium Geschäftsmodellen zu steigern. Hierbei werden neben den Faktoren, die diesen positiven Effekt mediieren, auch moderierende externe Faktoren untersucht. Insgesamt sind die Beiträge dieser Arbeit nicht auf digitale Geschäftsmodelle und digitale Nudges beschränkt. Die Dissertation liefert auch Forschungsbeiträge in den Bereichen Electronic Word of Mouth und Cognitive Biases. Aus praktischer Sicht können Unternehmen die im Rahmen der Arbeit gewonnenen Erkenntnisse zur Gestaltung ihres Conversion Funnels nutzen, um durch den sinnvollen Einsatz von digitalen Nudges Acquisitions und Customer Conversions zu steigern.

Deutsch
URN: urn:nbn:de:tuda-tuprints-60086
Sachgruppe der Dewey Dezimalklassifikatin (DDC): 600 Technik, Medizin, angewandte Wissenschaften > 650 Management
Fachbereich(e)/-gebiet(e): 01 Fachbereich Rechts- und Wirtschaftswissenschaften > Betriebswirtschaftliche Fachgebiete > Fachgebiet Information Systems & E-Services
01 Fachbereich Rechts- und Wirtschaftswissenschaften > Betriebswirtschaftliche Fachgebiete
01 Fachbereich Rechts- und Wirtschaftswissenschaften
Hinterlegungsdatum: 02 Apr 2017 19:55
Letzte Änderung: 02 Apr 2017 19:55
PPN:
Referenten: Benlian, Prof. Dr. Alexander ; Carolin, Prof. Dr. Bock
Datum der mündlichen Prüfung / Verteidigung / mdl. Prüfung: 28 März 2017
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