File(s) under permanent embargo
Reason: Due to the NDA with the company providing the data, I request to keep this file confidentially,
THE ROLE OF CUSTOMER NON-COMPLIANCE AND COMMUNICATION TIMING IN THE MANAGEMENT OF TARGETED PROMOTIONAL PROGRAMS
The objective of the two essays is to understand how to enhance the targeted promotional programs. The first essay focuses on the importance of considering non-compliance to evaluate the target marketing and draw meaningful business implications. The second essay investigates the crucial impact of communication timing to improve the efficiency of promotional programs.
The first essay, “Addressing Customer Non-compliance in Causal Studies”: Although numerous studies have examined how to reveal the causal relationship between targeting and customer’s conversion, focusing on the selection bias induced by targeting, the non-compliance issue remains sparse in the marketing literature. To fill this gap, I investigate the importance of addressing non-compliance in target program evaluation. Specifically, I propose a method to infer the causality, given the high proportion of non-compliers. I use propensity score matching and instrument variable method and show about 59% of the target message effects are nullified by non-compliance. Nevertheless, our findings suggest that firms carefully investigate whether compliance induces enough conversion to offset the marketing expense when deploying a multi-channel strategy because the level of customer awareness moderates the effect of the marketing message.
The second essay “When Do You Talk to Your Customers? An Empirical Study of the Impacts of Communication Timing in the Prescription Delivery Service Market”: I investigate how to improve the marketing communication of the prescription delivery service that has been rapidly emerging, especially focusing on communication timing. I identify the causal relationship between the communication timing and targeting effect while controlling the potential endogeneity with the instrument method. Interestingly, my findings show contacting patients at the early prescription cycle is far more effective than at the end, despite no need for the refill, but well-awareness of the service can moderate the impact of communication timing. I also show that timing is vital for targeting effectiveness and a firm’s profitability by optimizing call allocation. Specifically, optimal timing targeting generates at least 4.3 times more conversion, inducing 6.6 times more net profits.