A company should try to retain the customer only as long as the cost to discourage defection is lower than the lost profit.

Question

Quizplus · Accepted Answer

This is a basic principle of customer retention economics. It is not sustainable to invest more in retaining a customer than the potential profit they may bring in the future. Therefore, companies should evaluate and balance the cost of retaining a customer against the lost profit from their defection.

A Company Should Try to Retain the Customer Only as Long