Research Note: Customer Intimacy and Cross-Selling Strategy

M. Tolga Akçura () and Kannan Srinivasan ()
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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

Management Science, 2005, vol. 51, issue 6, 1007-1012

Abstract: 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.

Keywords: addressable marketing; customer relationship management; game theory (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (24)

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