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From the Little Stream Software blog

There's lots of discussion around how new customers and repeat customers should be treated and what deals they are offered.

One side says loyal customers should be treated like they are important because they've stuck with you and have proved their worth. A retention-focus.

The other side says new customers need deals and special treatment or they'll buy from somewhere else. An acquisition focus.

Then there's a third side that says everyone should be treated the same.

In the grand scheme, any of the three options can work. What matters is deciding which fits your brand and staying consistent. Saying customers are the lifeblood of your business while making them wait an hour on hold and only allowing new customers to get free gifts will end up pissing off everyone.

What your competitors offer matters too. Many wireless companies only gave things to new customers while existing customers got nothing. This lead to customers switching around carriers often enough that they'd always be a "new" customer. Then a competitor would make it major marketing point by giving deals or specials only to existing customers. Now there's a mix of new/loyal incentives and you can tell who is acquisition-focused vs retention-focused.

If there's not a clear choice for your brand, you can look at your metrics to see which might fit better. The higher your acquisition cost or the lower your profit, the more you should lean on retention and offers to existing customers. Acquiring an order from an existing customer is usually cheaper than acquiring a new customer. A high margin or a very sticky product means you can lean more towards acquisition-only offers.

Whatever path you take: retention, acquisition, or balanced, make sure everyone gets enough customer service to keep them satisfied. That's the minimal bar these days and without it, your store will suffer in the long-term as long-term customers defect and new customers are warned away.

Eric Davis

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