1. 1 Customer Economics IDS Financial Services

2. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan2 Marketing Opportunities Retain Acquire and recapture Cross-sell and upgrade Acquire Competitor Switcher Loyal Large Medium Small Size Loyalty

3. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan3 Customer Orientation Business Growth can be framed as a matter of –capturing/acquiring high value consumers, and –retaining high value consumers, implying IDS’ strategic issue becomes balancing –acquisition expenditures –retention expenditures

4. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan4 Customer Acquisition Points to Ponder: –what are you spending to acquire prospects? Last year/cycle –what is your conversion rate? –Ceiling effect : what is the likely acquisition rate in the best case scenario (unlimited spending)?

5. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan5 Acquisition Costs for Service Providers

6. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan6 Acquisition Costs By Retail Format

7. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan7 Customer Retention Points to Ponder: –what are you spending to retain prospects? –what is your retention rate? –Ceiling effect : what is the likely retention rate in the best case scenario (unlimited spending)?

8. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan8 The Retention Payoff

9. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan9 Customer Loyalty : Some Comparisons

10. P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan10 Some Recent Research: Reinartz and Kumar (2002) Consider two dimensions: –Profitability (not loyalty!) –Length of Relationship So, we have ButterfliesTrue Friends StrangersBarnacles Profitability Length of relationship