Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2021
  • Working Paper
  • HBS Working Paper Series

Improving Customer Compatibility with Tradeoff Transparency

By: Ryan W. Buell and MoonSoo Choi
  • Format:Print
  • | Language:English
  • | Pages:43
ShareBar

Abstract

Through a large-scale field experiment with 393,036 customers considering opening a credit card account with a nationwide retail bank, we investigate how providing transparency into an offering’s tradeoffs affects subsequent rates of customer acquisition and long-run engagement. Although we find tradeoff transparency to have an insignificant effect on acquisition rates, customers who were shown each offering’s tradeoffs selected different products than those who were not. Moreover, prospective customers who experienced transparency and subsequently chose to open an account went on to exhibit higher quality service relationships over time. Monthly spending was 9.9% higher and cancellation rates were 20.5% lower among those who experienced transparency into each offering’s tradeoffs. Increased product usage and retention accrued disproportionately to customers with prior category experience – more-experienced customers who were provided transparency spent 19.2% more on a monthly basis and were 33.7% less likely to defect after nine months. Importantly, we find that these gains in engagement and retention do not come at the expense of customers’ financial wellbeing – the probability of making late payments was reduced among customers who experienced transparency. We further find that the positive effects of tradeoff transparency on engagement and retention were attenuated in the presence of a promotion that provided financial incentives to choose particular offerings. Taken together, these results suggest that providing transparency into an offering’s tradeoffs may be an effective strategy for informing customer choices, leading to better outcomes for customers and firms alike.

Keywords

Behavioral Operations; Operational Transparency; Customer Compatibility; Customer Behavior; Consumer Behavior; Decision Making; Operations; Strategy

Citation

Buell, Ryan W., and MoonSoo Choi. "Improving Customer Compatibility with Tradeoff Transparency." Harvard Business School Working Paper, No. 20-013, July 2019. (Revised January 2021.)
  • SSRN
  • Read Now

About The Author

Ryan W. Buell

Technology and Operations Management
→More Publications

More from the Authors

    • Harvard Business Review

    Elevate Employees, Don't Eliminate Them

    By: Ryan W. Buell
    • 2021
    • Faculty Research

    Multi-location Workers in Multinational Firms? Tradeoffs in Contextual Specialization of Employees and Organizational Outcomes

    By: Hise O. Gibson, Ryan W. Buell and Prithwiraj Choudhury
    • July–August 2021
    • Manufacturing & Service Operations Management

    Surfacing the Submerged State: Operational Transparency Increases Trust in and Engagement with Government

    By: Ryan W. Buell, Ethan Porter and Michael I. Norton
More from the Authors
  • Elevate Employees, Don't Eliminate Them By: Ryan W. Buell
  • Multi-location Workers in Multinational Firms? Tradeoffs in Contextual Specialization of Employees and Organizational Outcomes By: Hise O. Gibson, Ryan W. Buell and Prithwiraj Choudhury
  • Surfacing the Submerged State: Operational Transparency Increases Trust in and Engagement with Government By: Ryan W. Buell, Ethan Porter and Michael I. Norton
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College