Effect of interactive marketing channels on service customer acquisition

Abstract

PurposeThe cost of customer acquisition is one of the largest expenses that service firms incur due to loss-generating quotes/proposals. This paper aims to connect interactive marketing communications channels with increased customer acquisition and non-interactive marketing communications channels with decreased customer acquisition by service firms.Design/methodology/approachTwo field studies using hazard models were used to assess the probability of acquiring a new customer after the prospect first contacts the firm. Multiple discrete hazard models were used to compare channels against each other.FindingsThree interactive marketing communications channels (word-of-mouth, online review forum, search engine optimization) increased the rate of acquiring a customer over time. I also compared non-interactive channels (billboard/signage, direct mail), but the analysis did not reveal any significant impact on acquisition rate by the non-interactive marketing communications channels.Originality/valueThe present study illustrates why the cost of acquisition is so high in the service sector and takes the unique step of linking interactive marketing communications channels with higher customer acquisition rates over time in a services context. Specifically, interactive marketing channels enable customers to find firms that offer the attributes that they seek, thereby increasing acquisition probabilities and decreasing acquisition costs.