Is Keeping Existing Customers Always Better than Acquiring New Ones?
Annalisa Cordoba, Manager, Spain, Member
A fundamental assumption of customer loyalty models is that keeping existing customers is less expensive than acquiring new ones. Buchanan and Gilles (1990) provided several reasons why increased profitability is associated with customer retention efforts (see the summary of customer loyalty).
But I wonder, are there also circumstances in which keeping existing customers is equally or more expensive than acquiring new ones?
My thinking is for example that in the internet age, the costs of acquiring (new) customers may be so low, that avoiding the hassle of keeping existing customers may be a better option sometimes....