Return on Engagement Initiatives: A Study of a Business-to-Business Mobile App
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abstract
Firms are increasingly offering engagement initiatives to facilitate firmcustomer interactions or interactions among customers, with the primary goal of fostering emotional and psychological bonds between customers and the firm. Unlike traditional marketing interventions, which are designed to prompt sales, assessing returns on engagement initiatives (RoEI) is more complex because sales are not the primary goal and, often, direct sales are not associated with such initiatives. To assess RoEI across varying institutional contexts, the authors propose and empirically implement a methodological framework to investigate a business-to-business mobile app that a tool manufacturer provides for free to engage its buyers. The data include sales by buyer firms that adopted the app over 15 months, as well as a control group of buyers that did not adopt. The results from a difference-in-differences specification, together with selection on observables and unobservables, show that the app increased the manufacturer's annual sales revenues by 19.11%22.79%; even after accounting for development costs, it resulted in positive RoEI. This RoEI was higher when buyers created more projects using the app, so customer participation intensity appears to underlie RoEI. This article contributes to engagement literature by providing a methodological framework and empirical evidence on how the benefits of engagement initiatives materialize.
