Cross-selling in customer service
Given the increasingly competitive environment characterizing many industries, customer service, specifically, post-sales technical support, has evolved as a key source of differentiation and profits. Against this backdrop, firms are looking to cross-sell products during customer service provision to generate revenue and transition their customer service operations from cost centers to profit centers. However, in the context of customer service, customers are contacting the firm about a product failure and not a purchase need, making cross-selling during customer service provision a challenging task. Essays 1 and 2 investigate which factors affect cross-sell outcomes in the customer service context.
Essay 1 addresses the following questions: Do characteristics of the customer, customer service agent, and cross-sell offer influence cross-sell revenues? Cross-sell revenues are defined as the sales generated per customer in the customer service context. Using data on the cross-sell transactions of 6782 customers of a computer systems firm who contacted the firm for technical support, Essay 1 demonstrates that for risk-averse customers and customers who accept cross-sell goods (versus services) as the cross-sell offer, cross-sell revenues increase. However, when risk-averse customers accept a good (versus service) as the cross-sell offer, cross-sell revenues decrease. Surprisingly, for customers who own focal products with high functionality, cross-sell revenues decrease, and this effect becomes more negative as the customer service agent’s resolution ability increases.
Essay 2 investigates cross-selling during customer service in an intercultural context and addressees the following question: What influences the likelihood of a cross-sell purchase during customer service by a customer in country X[subscript s] from a customer service agent in Country Y[subscript j]? Multinational firms offshore their customer service operations to a set of low-cost countries to reduce costs and gain access to specialized skills. Customer service agents in these countries provide technical problem resolution services to customers in a different set of countries, creating a cultural dyad between customers and customer service agents. Currently, such firms are asking their offshored customer service agents to cross-sell during customer service provision. Using data from a computer systems firm of 117,721 customer service encounters during which a cross-sell product was pitched, of which 3.6% resulted in a purchase, Essay 2 demonstrates both positive and negative effects of cultural distance on the likelihood of a customer making a cross-sell purchase during customer service. Specifically, Essay 2 shows that cultural distance (1) weakens the negative effect of agent resolution ability, (2) strengthens the positive effect of risk aversion, and (3) weakens the positive effect of failure severity on cross-sell purchase likelihood. I use the findings from both Essays 1 and 2 to generate implications for managers on how to improve cross-selling outcomes in their customer service operations.