October 11, 2007

Customer Loyalty vs. Customer Acquisition

Imagine you are running a direct-to-consumer business. Your board of directors wants you to increase sales at a faster rate than sales are growing.

Your board of directors is split on how, from a marketing standpoint, to grow sales. Half the team wants to increase customer loyalty via a loyalty/rewards program. The other half of the team wants to grow the business by ramping-up customer acquisition activities.

What information would you need to help your CEO make this decision?

In lieu of good data, which strategy do you believe is more likely to be successful, and why?