Subscription-based service providers routinely offer discounts to pacify angry customers when there’s been a service failure. But that strategy may backfire in the longer run, according to University of Notre Dame marketing researcher Vamsi Kanuri.
Kanuri’s paper on the topic "The Unintended Consequence of Price-Based Service Recovery Incentives" recently earned the American Marketing Association Retail & Pricing SIG's Best Paper Award. The award honors a paper published in 2019 that has made a significant contribution to the retail or pricing literature.
The assistant professor of marketing at Notre Dame’s Mendoza College of Business co-authored the paper, published in the June 2019 edition of the Journal of Marketing, with Michelle Andrews from Emory University. The researchers used econometric techniques to examine 6,919 renewal decisions of subscribers who threatened to cancel their subscriptions following service delivery failures at a large U.S. newspaper firm. They found that the price-based recovery incentives that were offered to remedy the service failure lowered the subscribers’ reference price for the service and thereby, hurt their renewal likelihood at the full price— the exact opposite of what the provider hoped to accomplish.
Read more about the research in this article, “Deal or No Deal? How Discounts for Unhappy Subscribers Can Backfire on Businesses.”
Kanuri’s research evaluates the performance and consumer welfare implications of marketing strategies within the domains of social media, services and multichannel marketing using econometric, optimization and machine learning techniques. His papers have been published in leading marketing and management journals including the Journal of Marketing, Journal of Marketing Research, Strategic Management Journal and Harvard Business Review, among other journals, books and popular press outlets.
His work has been recognized with prestigious academic awards from the AMA, AMS, INFORMS and Decision Sciences organizations for its impact on marketing practice, as well as featured in numerous news outlets including NPR, Financial Times, The Wall Street Journal and others. He frequently consults with companies on a variety of marketing problems and builds statistical models that aid in managerial decision making.
At Notre Dame, Kanuri currently teaches marketing decision models in the undergraduate business program and marketing analytics in the Notre Dame MBA program. He received the James Dincolo outstanding undergraduate marketing professor and was included in Poets and Quants' “40-under-40 Best MBA Professors” listing in recognition for his teaching.
Originally posted on Mendoza News.