Customer Acquisition Promotions and Customer Asset Value

In this article, the author addresses the question of how a firm’s acqui-sition efforts influence the composition of the customer portfolio. The first part of the research is a conceptual model that illustrates how customer uncertainty provides an explanation for why promotionally acquired cus-tomers have lower repurchase rates and smaller lifetime values. The sec-ond part of the research involves empirical analyses of customer-level data from a newspaper and an online grocer. In both data sets, acquisi-tion discount depth is negatively related to repeat-buying rates and cus-tomer asset value. For example, a 35 % acquisition discount results in customers with about one-half the long-term value of non–promotionally acquired customers