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A Study on the Current Customer's Defection Due to Promotions Focused on New Customer Acquisition  

Lee, Ki-Soon (고려대학교 경영학)
Kim, Sang-Yong (고려대학교 경영대학)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.32, no.1, 2007 , pp. 105-124 More about this Journal
Abstract
CRM (Customer Relationship Management) becomes a crucial paradigm as the environment of the market changes. About the CRM actively maintaining and managing customers that have been already acquired, the research has been done as a plan to lure loyal customers who bring lucrative profits in the long term for the company in order to increase the value to the customers. However, in practice, the focus is on putting spurs to attracting new customers in a short term rather than retaining existing customers who give profitable revenues. If the company puts high emphasis on drawing the new customers, in a CRM's point of view in relation to the value of the customers, it can incur a loss in the long run. The reason is that if the firm conducts discriminative sales promotion, the existing clients with high loyalty will feel relatively treated inappropriately and they will have negative feelings such as being betrayed from the company they prefer. This occurrence of negative emotion can in-crease the possibility of highly profitable clients' secession. In consequence, this paper focusing on the process of the client segmentation at the mobile telecommunication services shows that the sales promotion strategy for the new customer attraction can lead to negative effect on the loyalty of the existing customers.
Keywords
CRM; Customer Defection; Negative Emotion; Customer Acquisition; Mobile Telecommunication Service;
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