Start Date
11-12-2016 12:00 AM
Description
Customer churn (whether consumers do not renew their contracts) is a major issue in the services industry. In this study, we examine how information transparency in the customer interaction affects churn. Two competing theories predict this effect, price elasticity (that induces churn) and high product informedness (that reduces churn). To address this tension, we used a unique dataset from a major European car insurance company to show that customers who interacted with channels with higher information transparency (a price comparison website) are less likely to churn than others who interacted with traditional channels by 3%, implying that information transparency helps to reduce customer churn. We also propose a randomized field experiment to corroborate our preliminary results. Our findings contribute to the HCI literature by linking information transparency to customer churn, providing implication to managers to better allocate resources to channels of high information transparency in order to reduce customer churn.
Recommended Citation
Cheng, Aaron; Li, Ting; and Pavlou, Paul, "Information Transparency and Customer Churn: Evidence from the Insurance Industry" (2016). ICIS 2016 Proceedings. 11.
https://aisel.aisnet.org/icis2016/Human-ComputerInteraction/Presentations/11
Information Transparency and Customer Churn: Evidence from the Insurance Industry
Customer churn (whether consumers do not renew their contracts) is a major issue in the services industry. In this study, we examine how information transparency in the customer interaction affects churn. Two competing theories predict this effect, price elasticity (that induces churn) and high product informedness (that reduces churn). To address this tension, we used a unique dataset from a major European car insurance company to show that customers who interacted with channels with higher information transparency (a price comparison website) are less likely to churn than others who interacted with traditional channels by 3%, implying that information transparency helps to reduce customer churn. We also propose a randomized field experiment to corroborate our preliminary results. Our findings contribute to the HCI literature by linking information transparency to customer churn, providing implication to managers to better allocate resources to channels of high information transparency in order to reduce customer churn.