Counting your customers: who are they and what will they do next?
Management Science
Mailing decisions in the catalog sales industry
Management Science
Individual Marketing with Imperfect Targetability
Marketing Science
Reward Programs and Tacit Collusion
Marketing Science
Competitive One-to-One Promotions
Management Science
Identifying Innovators for the Cross-Selling of New Products
Management Science
Brand Loyalty Programs: Are They Shams?
Marketing Science
Marketing Models of Service and Relationships
Marketing Science
Customer Metrics and Their Impact on Financial Performance
Marketing Science
Optimizing the Marketing Interventions Mix in Intermediate-Term CRM
Marketing Science
Marketing and Designing Transaction Games
Marketing Science
When Acquisition Spoils Retention: Direct Selling vs. Delegation Under CRM
Management Science
When to “Fire” Customers: Customer Cost-Based Pricing
Management Science
| Hi-index | 0.01 |
We analyze firms' decisions to invest in customer relationship management (CRM) initiatives such as acquisition and retention in a competitive context, a topic largely ignored in past CRM research. We characterize each customer by her intrinsic preference towards each firm, the contribution margin she generates for each firm, and her responsiveness to each firm's retention and acquisition efforts. We show that a firm should invest most heavily in retaining those customers that exhibit moderate responsiveness to its CRM efforts. Further, a firm should most aggressively seek to attract those customers that exhibit moderate responsiveness to their provider's CRM efforts and those that are moderately profitable for their current provider. Investing more in customers that are more responsive does not always lead to higher firm profits, because stronger competition for such customers tends to erode the effects of higher CRM efforts of an individual firm. When firms develop a customer relationship over time to generate higher contribution margin or customer responsiveness, we show that such developments may not always be desirable, because sometimes these future benefits may lead to more intense competition and hence lower profits for both firms.