Motivating Effective Mobile App Adoptions: Evidence from a Large-Scale Randomized Field Experiment
35 Pages Posted: 13 Jun 2017
Date Written: June 9, 2017
Prior literature has established a positive association between mobile app adoption and customers’ purchase behaviors. However, it is not clear whether firms can actively influence customers’ mobile app adoptions and increase their purchases through these induced adoptions.
Using a randomized field experiment involving over 230,000 customers, we investigate: i) whether and how a firm can motivate customers to adopt mobile apps using external interventions and, ii) the causal effect of induced mobile app adoptions on customers’ purchase behaviors.
We find that: i) both providing monetary incentives and information can lead to a significant increase in customers’ mobile app adoption; ii) the effect of mobile app adoptions varies greatly depending on how customers are induced.
Although providing monetary incentives may lead to a larger increase in mobile app adoptions, such induced adoptions do not result in more purchases in the long run. In contrast, providing information leads to effective mobile adoptions that sustainably increase customers’ purchases, and overall profits for the firm. We further explore the underlying drivers of such differences in the effect of induced app adoptions and find that information, as compared to monetary incentives, may serve as a better sorting device and can attract customers who would need the app more and use it more effectively. Firms cannot predict such ‘customer types’ from observable characteristics, and thus need to use appropriate interventions to induce sorting. Finally, we examine customers’ multi-channel purchase behaviors and find evidence for how induced app adoptions affect customers’ purchase behaviors across mobile and desktop channels. Specifically, there is a complementary effect between mobile app and the desktop channel for information-induced app adopters, but a substitution effect between the mobile app and mobile web channel for incentive-induced app adopters. For information-induced app adopters, the mobile app serves as a discovery tool and helps them find a greater variety of deals.
In summary, by leveraging a randomized field experiment, our study provides actionable insights for firms designing interventions to motivate effective mobile adoptions.
Keywords: Mobile App, Induced Adoption, Sorting, Randomized Field Experiment, Local Average Treatment Effect
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