case analysis 393

Pamela, marketing manager at TCI, Inc., is very irritated. She spent the whole summer designing a marketing strategy, and according to independent tests, the campaign has, beyond a reasonable doubt, proven to be effective in achieving the objective of retaining customers. Over the last 2 years, it has been observed that the average percentage of customers leaving TCI and moving to a different company is about 20% of the existing customer base, and at this speed TCI will end up losing a lot of customer and money. It is a well-known fact that it costs much more money to acquire a new customer than retaining an existing one so she does not understand Robert who is saying that the promotion Pamela is suggesting will cost a fortune. The promotion consists of giving existing customer a monetary reward so they stay with TCI. Robert says that even though he agrees that that the campaign works, it should not be implemented because the cost does no justify offering the incentive to all existing customers. Pamela insists that you have to see the long-term implications of the initiative and not the short-term investment but Robert does not believe in Pamela’s crystal ball. He keeps saying: “show me the money” and I will agree.

What should they do?