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and interact with merchandise, they never buy. ese users are unique as they are regularly using the app but have never made a purchase in their life. ey should be o ered product bundles or time sensitive deals at an attractive price based on their in-app behavior. ey are good candidates for CKV, CRV and CIV. Some of the Window Shoppers will make purchases and move up to Bargain Hunters. However, to reduce additional losses, they should be on the IAP model along with in-app ads.
Yachts (low usage, negative pro tability): We term these users yachts due to their cost versus ben- e t ratio. ey are high-maintenance yet used only for a short while. ese users have neither made IAP nor use the app regularly a er downloading
it. If they start using the app due to a change in network externalities or app noti cations, they
will move to Window Shoppers’ cell. De-market to them and o er IAP model with in-app advertise- ments to reduce additional losses.
conclusion
Engaging customers in the business world has increased revenues and pro ts by 5.6% and 5.4% respectively in the case of the B2C service industry (Kumar & Pansari, Forthcoming). We believe the application of customer engagement (CE) to the app industry will have profound bene ts in terms of loyalty and pro tability for both app developers and app stores (Google, Apple and others) in the future. With the change in the commission structure that incentivizes long-term relationships, retention is more important now for companies than it ever was before. e new structure will also address a major problem that marketers face, which is how to de ne a customer by converting non-contractual custom- ers (e.g. IAP, IAA, paid) to contractual ones (e.g. subscription).
e business strategy outlined in this study recommends adding dynamic content and increasing engagement with the app to address app retention. Additionally, increased pro ts can be derived by having a stable revenue ow from each app user segment by catering to their speci c needs and characteristics. Stable revenue results in better liquidity management which aids nancial
planning. e app users will not only bene t from a richer experience, better service, and higher rewards, but also will be engaged with the app for a long time in a pro table manner. ■
V. Kumar (VK) is the Regents’ Professor, Richard and Susan Lenny Distinguished Chair Professor, and Executive Director, Center for Excellence in Brand and Customer Management, at the J. Mack Robinson College of Business at Georgia State University, USA.
Orhan Bahadir Dogan is a doctoral student in Marketing at the Center for Excellence in Brand and Customer Management at the J. Mack Robinson College of Business, Georgia State University, USA.
Avishek Lahiri is a doctoral student in Marketing at the Center for Excellence in Brand and Customer Management at the J. Mack Robinson College of Business, Georgia State University, USA.
Acknowledgments: We thank Gayatri Shukla, Amber McCain, and Bharath Rajan for their comments on the earlier version of this manuscript. We also thank Renu for copyediting the manuscript.
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