ARE WE THERE YET? ANALYZING PROGRESS IN THE CONVERSION FUNNEL USING THE DIVERSITY OF SEARCHED PRODUCTS

Anat Goldstein, Gal Oestreicher-Singer, Ohad Barzilay, Inbal Yahav

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

The conversion funnel is a model describing the stages consumers go through in their journey toward a purchase. This journey often lasts several days to weeks and can include multiple visits to a seller’s website. A large body of literature has focused on using observable search patterns to identify consumers’ hidden purchasing stages and to estimate their likelihood of conversion. We propose a novel set of measures to better reveal the consumer’s hidden stage in the funnel. These measures are based on the diversity of the searches that a customer engages in while browsing an e-commerce website, and they include not only the number of different products that are searched for, but also measures that rely on unobserved similarities among products, captured in a product network (in which products are assumed to be “similar” if they are frequently co-searched). We operationalize and evaluate our proposed measures using a large-scale dataset from a medium-sized tourism website used for comparing and booking flights. We estimate a hidden Markov model to show that our proposed diversity measures are associated with progress in the funnel and consumers’ conversion likelihood. Specifically, we show that consumers go through different distinguishable stages (states) in their journey, characterized by different values of our proposed diversity measures. To demonstrate the managerial and business implications of our theory, we show that incorporating search-diversity measures into a baseline prediction model significantly improves the model’s performance in predicting purchase likelihood and churn.

Original languageEnglish
Pages (from-to)2015-2054
Number of pages40
JournalMIS Quarterly: Management Information Systems
Volume46
Issue number4
DOIs
StatePublished - Dec 2022
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2022 University of Minnesota. All rights reserved.

Funding

We would like to thank the senior editor, the associate editor, and the three reviewers for their constructive and insightful comments and suggestions. Additionally, we would like to thank Karen Marron for her editorial assistance. This study benefitted from the generous support of the Amadeus@TAU lab, the Jeremy Coller Foundation, and the Henry Crown Institute of Business Research in Israel. Gal Oestreicher-Singer is The Mexico Professor of Information Systems and the associate dean of research at the Coller School of Management at Tel Aviv University in Israel. She received her Ph.D. from the Stern School of Business at New York University. Her research focuses on the effects of social media, consumer engagement, and peer influence on electronic commerce outcomes, and on the effects of business models on electronic commerce. Her work has been published in the top journals in the fields of both Information Systems and Marketing. She currently serves as a senior editor at MIS Quarterly. She has also been the recipient of several prestigious grants and awards, most recently the ERC grant.

FundersFunder number
Henry Crown Institute of Business Research in Israel
European Research Council
Jeremy Coller Foundation

    Keywords

    • Conversion funnel
    • HMM
    • consumer research
    • e-commerce
    • engagement
    • hidden Markov model
    • online booking
    • online marketing
    • search diversity
    • tourism

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