Integrating management of customer value and risk in e-commerce

Authors:
Markus Ruch;Stefan Sackmann
Affiliations:
Institute of Computer Science and Social Studies, Department of Telematics, University of Freiburg, Freiburg, Germany 79098;Institute of Information Systems, Department of Information Management, University of Halle-Wittenberg, Halle, Germany 06108
Venue:
Information Systems and e-Business Management
Year:
2012

Citing 7
Cited 0

Counting your customers: who are they and what will they do next?

Management Science
CRM and Customer Portfolio Management for E-Tailers

HICSS '08 Proceedings of the Proceedings of the 41st Annual Hawaii International Conference on System Sciences
When Do You Pay? The Business Impact of Payment Time Perception

Electronic Markets
The Effects of the Internet on Network Structures and Business Performance

Electronic Markets
Standardizing Interactive Pricing for Electronic Business

Electronic Markets
Customer Lifetime Value Measurement

Management Science
Toward improving the relevance of information systems research to practice: the role of applicability checks

MIS Quarterly

Quantified Score

Hi-index	0.00

Visualization

Abstract

Increasing turnover in e-commerce is inherently linked with a rising risk of payment fraud. Online retailers (e-tailers) aiming for a company-wide value orientation should actively manage this risk. However, by applying current approaches such as adding an overall risk premium to average prices or restricting accepted payment methods, extra turnover potentials remain unconsidered since customer-specific value and risk properties are neglected. In this contribution, a novel approach for transaction-specific customer management for e-tailers is proposed, taking customer-specific risk and turnover potential into consideration--fully automated and in real time. Therefore, risk-turnover combinations are calculated representing risk and value potentials of a single customer as well as risks associated with different payment methods. Based on these risk-turnover combinations, a new approach for an optimal, customer- and transaction-specific selection of payment methods becomes possible. Finally, calculated risk-adjusted prices aim to realize a given product base price and can be directly used for customer risk management or for adapting an e-tailer's major marketing or pricing strategy.