Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation
How should a company best allocate its spending between acquisition and retention? Under what condition should a company devote resources and money to analytics? The above questions are just examples of more general issues concerning many companies when managing their customer acquisition and retent...
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ndltd-GEORGIA-oai-digitalarchive.gsu.edu-managerialsci_diss-10122013-04-23T03:22:05Z Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation Wang, Geng How should a company best allocate its spending between acquisition and retention? Under what condition should a company devote resources and money to analytics? The above questions are just examples of more general issues concerning many companies when managing their customer acquisition and retention programs. To answer the above questions, I will conduct a study on the allocation of financial resources between incentives that target different types of customers, and the allocation of resources between incentives and analytics spending. This research first distinguishes between customers and acquisition, between incentive and price discount, and between acquisition and retention. It then proposes a new concept, “free rider”, in a customer acquisition and retention context. Building on the free-rider concept, two mathematical models are formulated to examine the optimal allocation between acquisition incentive, retention incentive, and analytics spending. Closed-form solutions are reached for both models and the results are interpreted in the context of marketing practice. The conditions leading to different patterns of optimal solutions of analytics spending, acquisition incentives, and retention incentives are discussed. Specifically, the detailed conditions under which the optimal acquisition incentives is zero or non-zero, the optimal retention incentives is zero or non-zero, and the optimal analytics spending is zero or non-zero, are provided. Factors determining the ceiling for acceptable level of cost of analytics are also examined. 2006-05-12 text application/pdf http://digitalarchive.gsu.edu/managerialsci_diss/13 http://digitalarchive.gsu.edu/cgi/viewcontent.cgi?article=1012&context=managerialsci_diss Managerial Sciences Dissertations Digital Archive @ GSU free rider analytics switching cost incentive retention acquisitions optmization Management Sciences and Quantitative Methods |
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free rider analytics switching cost incentive retention acquisitions optmization Management Sciences and Quantitative Methods |
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free rider analytics switching cost incentive retention acquisitions optmization Management Sciences and Quantitative Methods Wang, Geng Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation |
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How should a company best allocate its spending between acquisition and retention? Under what condition should a company devote resources and money to analytics? The above questions are just examples of more general issues concerning many companies when managing their customer acquisition and retention programs. To answer the above questions, I will conduct a study on the allocation of financial resources between incentives that target different types of customers, and the allocation of resources between incentives and analytics spending. This research first distinguishes between customers and acquisition, between incentive and price discount, and between acquisition and retention. It then proposes a new concept, “free rider”, in a customer acquisition and retention context. Building on the free-rider concept, two mathematical models are formulated to examine the optimal allocation between acquisition incentive, retention incentive, and analytics spending. Closed-form solutions are reached for both models and the results are interpreted in the context of marketing practice. The conditions leading to different patterns of optimal solutions of analytics spending, acquisition incentives, and retention incentives are discussed. Specifically, the detailed conditions under which the optimal acquisition incentives is zero or non-zero, the optimal retention incentives is zero or non-zero, and the optimal analytics spending is zero or non-zero, are provided. Factors determining the ceiling for acceptable level of cost of analytics are also examined. |
author |
Wang, Geng |
author_facet |
Wang, Geng |
author_sort |
Wang, Geng |
title |
Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation |
title_short |
Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation |
title_full |
Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation |
title_fullStr |
Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation |
title_full_unstemmed |
Effects of Free Riders and Incentive Discrimination on Customer Acquisition and Retention Resource Allocation |
title_sort |
effects of free riders and incentive discrimination on customer acquisition and retention resource allocation |
publisher |
Digital Archive @ GSU |
publishDate |
2006 |
url |
http://digitalarchive.gsu.edu/managerialsci_diss/13 http://digitalarchive.gsu.edu/cgi/viewcontent.cgi?article=1012&context=managerialsci_diss |
work_keys_str_mv |
AT wanggeng effectsoffreeridersandincentivediscriminationoncustomeracquisitionandretentionresourceallocation |
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1716584205034455040 |