Interesting Results
Low Introductory Prices = Lower Lifetime Value
Many businesses attempt to acquire new customers by offering them discounts on their first purchase, but recently published research suggests that there is a negative relationship between acquisition discounts and lifetime customer value. The research examined data pertaining to newspaper subscribers and customers of an online grocery business and found that for both types of businesses, the greater the discount used to acquire a customer, the lower that customer’s lifetime value tended to be. This was true even for repeat buyers (those who purchased again at full price after receiving an acquisition discount for an introductory period), although for repeat buyers, the relationship was much stronger for online grocery purchasers than for newspaper subscribers.