Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Customers prefer to pay more in advance to ensure that they will receive refunds later on

27.04.2015

New WHU study shows: customers who receive refunds are more satisfied and terminate their contracts less often

A new study by WHU – Otto Beisheim School of Management, in cooperation with Goethe University Frankfurt and the University of Toronto Rotman School of Management, has found that both service companies and their customers benefit from a moderate increase in monthly fees.

Monthly uniform advance payments are popular not only with customers but also with service companies, such as providers of electricity or gas. Customers benefit from predictability of monthly costs, and service companies receive payments earlier. In three empirical studies, an international team of researchers evaluated survey and billing data for more than 20,000 German home electricity customers with an eye to the customers' reactions to refunds and extra payments.

According to the study, customers who receive a refund pay less attention to the monthly fee, recommend their provider more often and change tariffs less frequently than customers who must pay back payments at the end of the year.

... more about:
»Rotman »conducted »electricity »leaves »prefer »reactions »uniform

"At first glance, it seems irrational that customers who grant their provider a free loan through higher monthly fees would be happier than they would be if they had lower monthly charges and an additional payment at the end," WHU Professor Christian Schlereth explains.

As a result, service companies are well-advised to enact moderate fee hikes so that more customers can receive a refund at year's end. One requirement here, however, is to make sure that the refund is not too high. "For the service companies that cooperated with us in our research, for instance, we recommend increasing the fee by 5 percent; this translates into additional charges of just €3.45 per month for the average household.

The consequence would be that not 50 percent but 70 percent of customers would receive a refund, which would reduce the churn rate by around 8 percent," Schlereth points out. "A service company is even more successful, though, if it leaves a modest fee increase up to customers' discretion, since a majority of customers, but not all, prefer the refund."

Increasing monthly charges can be useful not only for service companies, however. Building landlords can also benefit when they collect advance payments for shared services: tenants, too, are often happier to receive a refund, whereas they are likely to ask for a complete disclosure of utility costs when they are required to make an extra payment at year’s end.

The study was conducted by Christian Schlereth of WHU – Otto Beisheim School of Management; Fabian Schulz and Bernd Skiera (both of Goethe University Frankfurt); and Nina Mazar of the University of Toronto Rotman School of Management. The study will be published in the upcoming September issue of the International Journal of Research in Marketing.

Nina Liesenfeld | idw - Informationsdienst Wissenschaft
Further information:
http://www.whu.edu

Further reports about: Rotman conducted electricity leaves prefer reactions uniform

More articles from Studies and Analyses:

nachricht Smart Data Transformation – Surfing the Big Wave
02.12.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

nachricht Climate change could outpace EPA Lake Champlain protections
18.11.2016 | University of Vermont

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Electron highway inside crystal

Physicists of the University of Würzburg have made an astonishing discovery in a specific type of topological insulators. The effect is due to the structure of the materials used. The researchers have now published their work in the journal Science.

Topological insulators are currently the hot topic in physics according to the newspaper Neue Zürcher Zeitung. Only a few weeks ago, their importance was...

Im Focus: Significantly more productivity in USP lasers

In recent years, lasers with ultrashort pulses (USP) down to the femtosecond range have become established on an industrial scale. They could advance some applications with the much-lauded “cold ablation” – if that meant they would then achieve more throughput. A new generation of process engineering that will address this issue in particular will be discussed at the “4th UKP Workshop – Ultrafast Laser Technology” in April 2017.

Even back in the 1990s, scientists were comparing materials processing with nanosecond, picosecond and femtosesecond pulses. The result was surprising:...

Im Focus: Shape matters when light meets atom

Mapping the interaction of a single atom with a single photon may inform design of quantum devices

Have you ever wondered how you see the world? Vision is about photons of light, which are packets of energy, interacting with the atoms or molecules in what...

Im Focus: Novel silicon etching technique crafts 3-D gradient refractive index micro-optics

A multi-institutional research collaboration has created a novel approach for fabricating three-dimensional micro-optics through the shape-defined formation of porous silicon (PSi), with broad impacts in integrated optoelectronics, imaging, and photovoltaics.

Working with colleagues at Stanford and The Dow Chemical Company, researchers at the University of Illinois at Urbana-Champaign fabricated 3-D birefringent...

Im Focus: Quantum Particles Form Droplets

In experiments with magnetic atoms conducted at extremely low temperatures, scientists have demonstrated a unique phase of matter: The atoms form a new type of quantum liquid or quantum droplet state. These so called quantum droplets may preserve their form in absence of external confinement because of quantum effects. The joint team of experimental physicists from Innsbruck and theoretical physicists from Hannover report on their findings in the journal Physical Review X.

“Our Quantum droplets are in the gas phase but they still drop like a rock,” explains experimental physicist Francesca Ferlaino when talking about the...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ICTM Conference 2017: Production technology for turbomachine manufacturing of the future

16.11.2016 | Event News

Innovation Day Laser Technology – Laser Additive Manufacturing

01.11.2016 | Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

 
Latest News

Researchers identify potentially druggable mutant p53 proteins that promote cancer growth

09.12.2016 | Life Sciences

Scientists produce a new roadmap for guiding development & conservation in the Amazon

09.12.2016 | Ecology, The Environment and Conservation

Satellites, airport visibility readings shed light on troops' exposure to air pollution

09.12.2016 | Health and Medicine

VideoLinks
B2B-VideoLinks
More VideoLinks >>>