NovaTel, a mobile telecommunications provider, has identified three segments with identical annual spend but very different relationship profiles: Segment A on long-term contracts with bundled services; Segment B on month-to-month plans who shop on price each renewal; and Segment C on legacy plans with higher prices than current market offers who have never switched. The CMO wants to prioritise retention investment. Which allocation MOST directly reflects relationship marketing principles?

Question

Answer

Invest equally across all three segments because identical annual spend means equivalent CLV, and a uniform retention strategy will maximise return on investment

Answer

Exit Segment B clients who have demonstrated price-sensitive switching behaviour, as their churn cost exceeds retention investment value, and redirect resources to Segments A and C

Answer

Prioritise Segment A because contractual lock-in makes them the lowest churn risk, allowing retention investment to be focused on the higher-risk Segments B and C

Answer

Segment C represents genuinely loyal customers with high CLV potential — invest in deepening the relationship; Segment A clients are retained by switching costs — invest in relationship value before contracts expire; Segment B clients are price-sensitive — use financial incentives selectively but focus on demonstrating value to reduce price sensitivity

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NovaTel, a mobile telecommunications provider, has identified three segments wit...

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