Upselling by Default: The Effect of Default Options on Travelers’ Board and Lodging Choices

Steffen, Angela; Weibel, Christian; Stämpfli, Aline E.; Arx, Widar von

doi:10.1177/0047287519877250

Cited by 6 publications

(11 citation statements)

References 52 publications

(77 reference statements)

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“…Although the data on revenue increase due to the auto-renewal process is not publicly available, a marketing survey showed that automatic renewal is the most common approach among membership organizations to retain their members (Rossell et al, 2020). An empirical study showed that the default add-on led to larger travel package purchases and generated more revenues (Steffen et al, 2019).…”

Section: Effortmentioning

confidence: 99%

A meta-analytic cognitive framework of nudge and sludge

Luo¹,

Soman²,

Zhao³

2021

Preprint

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Public and private institutions worldwide have gained considerable traction in developing interventions to alter people’s behaviors in predictable ways without limiting the freedom of choice or significantly changing the incentive structure (Thaler & Sunstein, 2008). A nudge is defined as an intervention to facilitate actions by minimizing friction and removing impediments, while a sludge is defined as an intervention that inhibits actions by increasing friction. While the terms nudge and sludge have garnered significant attention in behavioral economics, psychology, and public policy, the underlying cognitive mechanisms behind these interventions and their impact on behavior change remain largely unknown. We develop a novel cognitive framework by classifying these interventions along six cognitive processes: attention, perception, memory, effort, intrinsic motivation, and extrinsic motivation. In addition, we conduct a meta-analysis of field experiments (i.e., randomized controlled trials) (n=179 papers, k=222 observations, N=4,440,011 participants) from 2008 to 2020 to examine the effect size of these interventions targeting each cognitive process. Our findings demonstrate that effort-reducing interventions (e.g., convenience) are more effective than intrinsic motivation interventions (e.g., commitment-making) to change behaviors. Interventions that reduce or increase friction had similar effect sizes, although there were considerably fewer sludge studies (k=44) conducted to date than nudge ones (k=178). This new meta-analytic framework provides cognitive principles for organizing nudge and sludge with corresponding behavioral impacts. The insights gained from this framework help inform the design and development of future interventions based on cognitive insights.

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Section: Effortmentioning

confidence: 99%

A meta-analytic cognitive framework of nudge and sludge

Luo¹,

Soman²,

Zhao³

2021

Preprint

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“…Various studies have considered customer demographic information in upselling in different markets, such as (Squires et al, 2007). In (Steffen et al, 2020), the authors examined the impact of default choices on meals and hotels in travel packages. The conclusion of two investigations showed that customers traveling as couples are more likely to purchase a superior hotel room and additional meals if the higher-grade choice is provided as the default instead of the lower-grade option.…”

Section: Literature Reviewmentioning

confidence: 99%

Will You Buy It Now?: Predicting Passengers that Purchase Premium Promotions Using the PAX Model

Emadi¹,

Thirumuruganathan²,

Robillos³

et al. 2021

Journal of Smart Tourism

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Upselling is often a critical factor in revenue generation for businesses in the tourism and travel industry. Utilizing passenger data from a major international airline company, we develop the PAX (Passenger, Airline, eXternal) model to predict passengers that are most likely to accept an upgrade offer from economy to premium. Formulating the problem as an extremely unbalanced, cost-sensitive, supervised binary classification, we predict if a customer will take an upgrade offer. We use a feature vector created from the historical data of 3 million passenger records from 2017 to 2019, in which passengers received approximately 635,000 upgrade offers worth more than $422,000,000 U.S. dollars. The model has an F1-score of 0.75, outperforming the airline's current rule-based approach. Findings have several practical applications, including identifying promising customers for upselling and minimizing the number of indiscriminate emails sent to customers. Accurately identifying the few customers who will react positively to upgrade offers is of paramount importance given the airline 'industry's razor-thin margins. Research results have significant real-world impacts because there is the potential to improve targeted upselling to customers in the airline and related industries.

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“…Some marketing literature make no apology for the use of opt-out structures to upsell or distribute newsletters, while others claim that consumers are not always well-served by opt-in restrictions. For example, recent research reported "how travel companies can benefit from default options to promote the sale of higher-graded-and thus higher-priced-travel packages" (Steffen et al, 2019). McQuinn has suggested that "if companies are forced to live with opt-in rules, the higher costs involved would ultimately be passed along to consumers in the form of higher prices, or would result in fewer free services" (McQuinn, 2017).…”

Section: Using Opt-out Structures For Self-serving Outcomesmentioning

confidence: 99%

Turning Up the Heat – User Errors and Other Insights Into Option Selection

2019

IJWI

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Upselling by Default: The Effect of Default Options on Travelers’ Board and Lodging Choices

Cited by 6 publications

References 52 publications

A meta-analytic cognitive framework of nudge and sludge

A meta-analytic cognitive framework of nudge and sludge

Will You Buy It Now?: Predicting Passengers that Purchase Premium Promotions Using the PAX Model

Turning Up the Heat – User Errors and Other Insights Into Option Selection

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