Implications and Limitations Sample Clauses

Implications and Limitations. Firms possess a variety of options for managing customer relationships. Two important factors that influence consumers’ decisions over the course of the customer lifecycle are customer commitments and forward-looking goals. The gaming industry is a useful context for studying the interplay between dynamic incentive schemes and customer investments. Video games have, in particular, extensive gamification elements designed to engage and motivate players. These systems often include goals related to rewards and require consumers to invest time and effort. In addition, recent video game business models such as “Free to Play” systems often include elements that encourage consumers to invest in the games. Beyond these design elements, online games are also useful research contexts because the researcher is able to observe detailed consumption data in addition to transaction data. I use data from an online FTP video game to explore how incentive schemes designed to encourage forward-looking behaviors interact with past consumer investments in a game. Many of my results are consistent with findings from the loyalty program literature. For example, I found evidence for points pressure. Specifically, players are more active when they are closer to earning rewards or to reaching the next level. The most interesting results are related to the interplay between past consumer investments in the game and response to future rewards. I find that consumer investment in the game moderates player response across different types of incentives. Specifically, I find that rewards that help players explore the game become less appealing after they purchase the character pack while rewards that help players progress in the game stay relevant. This finding has important customer management implications. The key insight is that the incentives that facilitate initial customer expenditures may be ineffective for managing established customers. If the goal is to maximize customer lifetime value then the incentives available to customers may need to change over the customer lifecycle. I also find that certain incentives may actually deter purchasing. In particular, rewards that provide in-game currency appear to discourage purchasing the character pack. This type of result highlights the complexity of customer management efforts. In game currency rewards increase preference by encouraging play but in-game currency can also act as a substitute for the purchase of the character pack. The p...
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Related to Implications and Limitations

  • Exceptions and Limitations For the avoidance of doubt, where Exceptions and Limitations apply to Your use, this Public License does not apply, and You do not need to comply with its terms and conditions.

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