Maximizing Online Revisiting and Purchasing: A Clickstream-Based Approach to Enhancing Customer Lifetime Value

Wael Jabr, Abhijeet Ghoshal, Yichen Cheng, Paul Pavlou

Research output: Contribution to journalArticlepeer-review

Abstract

Online retailers are increasingly focused on maintaining a long-term relationship with customers, encouraging repeat visits rather than single-time purchases to increase customer lifetime value. To help retailers maximize the probabilities of customers’ revisiting and purchasing, we develop a two-stage model to better characterize and predict these two fundamental customer activities. In the first stage, we characterize the propensity of a customer revisiting the retailer’s website. In the second stage, we develop a stochastic model that predicts revisits while also incorporating individual customer heterogeneity in exerted search effort during repeated visits. This heterogeneity is based on individual customer preferences in the choice of consideration sets, product information, pricing, and the search environment. Using customer level clickstream data, we show that our approach is not only better at predicting repeat customer visits, compared to existing methods, but also explainable and managerially interpretable. Most importantly, using computationally efficient simulation-based prescriptive analytics, we leverage our modeling approach to propose practical intervention strategies that maximize the joint likelihoods of customers revisiting and purchasing at the individual customer level.

Original languageEnglish (US)
Pages (from-to)470-502
Number of pages33
JournalJournal of Management Information Systems
Volume40
Issue number2
DOIs
StatePublished - 2023
Externally publishedYes

Keywords

  • Clickstream data
  • e-retail
  • explainable modeling
  • lifetime value
  • online repurchasing
  • online retail
  • prescriptive analytics
  • probabilistic modeling

ASJC Scopus subject areas

  • Management Information Systems
  • Computer Science Applications
  • Management Science and Operations Research
  • Information Systems and Management

Fingerprint

Dive into the research topics of 'Maximizing Online Revisiting and Purchasing: A Clickstream-Based Approach to Enhancing Customer Lifetime Value'. Together they form a unique fingerprint.

Cite this