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Existing customers versus new prospects: who should get the reward?


Should you reward your existing customers for their loyalty, or spend your marketing budget on attracting new business? This is the dilemma explored by Jiwoong Shin and K. Sudhir, writing for MIT Sloan Management Review.

The authors observe that expert opinions differ on the relative merits of the two strategies.

Those who favour rewarding existing customers often point out that customer retention is less expensive than acquisition. Those who prefer to use resources to attract new business cite the fact that existing customers have already shown a willingness to pay the full price for the company’s products or services.

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Source Article: Should You Punish or Reward Current Customers?
Author(s): Jiwoong Shin and K. Sudhir