Abstract
This paper studies two strategies of customer poaching in technology-intensive industries: paying customers to switch (acquisition spending) versus attracting customers by new technology. We analyze how these two strategies affect the three stages of customer relationship management -- acquisition, retention, and revenue generation -- in different ways. We evaluate these issues in the global mobile service industry using a firm-level panel dataset of 38 operators in 7 countries over 8 years. We find that acquisition spending helps to attract new customers. However, it does not improve customer retention or revenue generation. Rivals' competitive actions substantially undercut the effectiveness of the focal firm's acquisition effort. Using new technologies alleviates this adverse effect, which suggests the strategic role of technology in the race for customers. Hence, it becomes important that firms synchronize their marketing strategies and technology strategies to acquire/retain the most valuable customers in technology-intensive markets.
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