Return on Engagement Initiatives (RoEI): A Study of a Business-to-Business Mobile App

Manpreet Gill, Shrihari Sridhar, & Rajdeep Grewal
Article Snapshot
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Mobile App Helps Engagement and Sales
Key Takeaways

​What? Firms increasingly offer engagement initiatives to facilitate firm–customer interactions with the primary goal of fostering bonds between customers and company.

So What? Assessing returns on engagement initiatives (RoEI) is complex as sales are not the primary goal and often direct sales are not associated with such initiatives

Now What? Using mobile apps and appropriately targeting customers results in RoEI can improve direct sales as a part of engagement initiatives.

​Article Snapshot: Executive Summaries from the Journal of Marketing

Firms employ engagement initiatives to facilitate customer interactions and foster emotional bonds with customers. This research shows how a business-to-business mobile app provides a new avenue to achieve engagement.


Engagement initiatives connect firms to their customers, but also invoke direct economic costs, without direct economic benefits.

We take a return-on-marketing view, questioning whether and how engagement initiatives pay off for firms, documenting RoEI.


Research Question

As B2B engagement apps are costly to develop, offered for free, and B2B buying processes are not instantaneous or individual-specific, assessing returns to these apps is complex and difficult (e.g., Beebee 2013). Recent work suggests that engagement initiatives might invoke non-sales outcomes such as trust, commitment, or loyalty (Brodie et al. 2011; Shiri, Beatty, and Morgan 2012), but scholars call for explicit links to economic outcomes (Lemon and Verhoef 2016), to affirm the viability of such initiatives.

Methods

We use difference-in-differences specification and matching estimators to address these objectives. Specifically, we use objective sales data from a sample of buyers that downloaded the app (treatment group) and compared sales of these firms in the 15 months after its launch to sales in the 15 months prior to its launch. In turn, we utilize data from a random sample of buyers that did not download the app (control group), over the same time intervals. To avoid a self-selection bias related to buyers that adopt the app strategically, we estimated the treatment effects using different methods.

Findings

In support of RoEI, we find that buyers that adopted the free app generated additional annual sales of 19.11%–22.79% for XYZ (relative to the pre-adoption period and benchmarked against non-adopters), even in the presence of alternate estimators, matching strategies, and data transformations. Because XYZ’s RoEI is higher for buyers that create more projects using the app, our findings also indicate the importance of participation intensity in an engagement initiative as an RoEI-generating mechanism.

Implications

For managers, we provide an implementable methodological framework to test the hypotheses of positive RoEI, thus eliminating conjecture surrounding whether engagement initiatives generate indirect benefits. Moreover, we propose an approach that uses data on sales transactions and firmographic variables, both of which are ubiquitous in marketing organizations. Firms offering free mobile apps could use our approach to estimate the causal impact of free apps, with a sample of buyers. Subsequently, they could extend the average sales increase from a sample, to the larger sample of all buyers..

Questions for the Classroom

  • How to document the returns on engagment initiatives, when the primary purpose is not sales?

  • How do define engagement intiatives, and how do they differ from traditional marketing initiatives like promotions?

  • How do we know if free mobile apps are paying off?


Article Citation: Manpreet Gill, Shrihari Sridhar, and Rajdeep Grewal (2017) Return on Engagement Initiatives: A Study of a Business-to-Business Mobile App. Journal of Marketing: July 2017, Vol. 81, No. 4, pp. 45-66.

doi: http://dx.doi.org/10.1509/jm.16.0149



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Manpreet Gill, Shrihari Sridhar, & Rajdeep Grewal
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