Stuck in the Adoption Funnel: The Effect of Delays in the AdoptionProcess on Ultimate Adoption

Online applications and services automate communications andtransactions between rms and consumers, promising large efficiencygains. However, consumers have been slow to use these onlinetechnologies intensively, despite widespread adoption of the internet.Customers frequently undergo a staggered adoption process that mayinvolve sign-up, experimentation, trial, and substantial usage untilthey fully embrace internet services. We ask whether delays in movingthrough the initial stages of this adoption process contribute toconsumers ultimately not using the service intensively. Such behaviorwould be consistent with laboratory findings on consumer memory. Weexplore this question using data from a German retail bank where only24% of the customers who sign up for the bank's online banking serviceuse it substantially. We use exogenous variation in delays in theadoption process, caused by vacations and public holidays in differentGerman states, to identify this effect. We find that delays in the earlystages of adoption significantly reduce a customer's probability ofmoving to substantial usage: A 10-day delay of a customer's first onlinelogin reduces the likelihood that she will ever use the technologysubstantially, by 33%. This eect is more severe for demographic groupswith less online experience.