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Research Note: Customer Intimacy and Cross-Selling Strategy

  • M. Tolga Akçura

    ()

    (Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907-1310)

  • Kannan Srinivasan

    ()

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213-3890)

Registered author(s):

    Better targeting opportunities and the increasing role of information-intensive environments have created new challenges for firms in obtaining customer information. Such information can help firms increase their profits through cross-selling opportunities. However, revealing personal preferences and contact information can raise the risks for customers when dealing with a firm. Consequently, some customers trade off the benefit and risks of revealing information. As the opportunity to obtain a higher level of information increases, customers incur a higher level of risk when dealing with a firm. This increases the firm's incentive to commit on a cross-selling level. By such a commitment, a firm can obtain customer intimacy and benefit from detailed customer information. As a result, profits increase while prices decrease. Thus, legal regulations that explicitly require firms to spell out the extent of cross-selling may actually improve the profits of the firm.

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    File URL: http://dx.doi.org/10.1287/mnsc.1050.0390
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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 51 (2005)
    Issue (Month): 6 (June)
    Pages: 1007-1012

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    Handle: RePEc:inm:ormnsc:v:51:y:2005:i:6:p:1007-1012
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