Customer Retention and Price Matching: The AFP´s Case

2008. Journal of Business Research. Vol. 61, Nº 6, Pp 691-696

Enrique Manzur M, Pablo Farías N, Pedro Hidalgo C, Sergio Olavarrieta S

Abstract:

Understanding the long-term price matching effects on CLV is important in evaluating the effectiveness of these policies in stimulating customer retention. In industries with low brand differentiation and low customer involvement (e.g., private pension system), it can be seen that choosing a brand is based on inertia. The objective of this article is to analyze the convenience for the firm of improving customer retention, by matching the lowest price in the Chilean private pension system. Results suggest that matching the industry's price leader reduces the firm's CLV, thus diminishing firm incentives to make this marketing effort.

Palabras claves: AFP, CLV, Chilean pension system, Customer lifetime value, Customer retention, Price defectors.

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