Jenny, a student, runs a high-end shoe business on the side. High quality. One thousand dollars a pair. Her customers are wealthy New Yorkers.
Jenny typically sells 10 pairs per month. For Christmas, she has more pairs—50—but there are 100 clients at her apartment who want the shoes. Yes, she lives in a spacious one. She must decide whom to sell to.
The clients include:
- 48 new clients: This is her only chance to get their business.
- 48 long-time clients: They will be offended if they don’t get the shoes. One attends her niece’s soccer games, where she always sees Jenny.
- 2 understanding clients (1 new, 1 old): Both are kind and will be okay if they miss out.
Who should Jenny prioritize?
Do extensive research on how companies manage situations like this. Design a strategy that quantifies the value of saying “yes” to some and “no” to others.
My comments are for IBM. The exact sale unit number is hard to find. But still, we can know how to prioritize our customers. Firstly, IBM’s inventory should focus on Cloud & Cognitive Software, this is the core of IBM’s business, and it’s increasingly important all these years. Followed by Global Technology Services and Global Business Services. As for the region, IBM should focus the inventory on the Asia Pacific and Europe, which were only facing a smaller revenue fall during the pandemic, and they are highly potential.
In a situation like this, I believe you should prioritize your existing customers over new customers. Customer retention is one of the most important parts of business, especially when acquiring a new customer can be so expensive for a company, when switching costs are so expensive. If you were to go after all the new customers, you leave yourself in a gamble, because there is no guarantee that the customers are going to fully commit to your brand, and your existing customers may become so frustrated that they leave your brand. Because we have one old customer who is nice and won’t care if they aren’t included this month, that is the only opportunity present to introduce a new customer to the brand. We are also able to supply one more new customer to total up to the supply of 50 that we have. In summary we supply: 48 existing customers + 2 new customers. In the future it is important to increase supply as the demand is increasing to be able to provide to the newer customers that approach the brand.
Under this specific situation, I will recommend the company prioritize the existing/old customers. Old customers have stayed with the company for so many years, and their loyalty is important for its continuous growth. Furthermore, getting new customers is expensive, and there is no guarantee that the company can get all 48 new customers. However, since one of the old customers will understand the situation that the company faced, I will suggest giving that spot to a new customer. Therefore, my recommendation will be 47 old customers with three new customers.
The company that I am working on is Disney, and I’d like to share some thoughts on that too. Disneyland is so popular worldwide, and it always gets super crowded during the peak tourist period. Such crowded not only generate heavy work for the park, but also influence visitors’ experience in the park. At this point, Disney is facing the situation of prioritizing visitors. In my opinion, I will suggest Disney prioritize its VIP customers first. After its VIP customers, all customers will have the same chance to reserve their spot for visiting the park on the Disneyland calendar.
In my opinion, the company should definitely prioritize those 48 new clients. One important note from the question is that “This is your only chance to get these new clients”, which means if you prioritize those new clients when the demand exceeds the inventory, they are going to be your customers. I used to study about consumer behavior in my undergraduate school, that you need to make 3 times more effort to get a new customer than retain an existing customer, and right here we have the chance to make the same effort to get a new customer with retaining a existing customer, so why not catch the chance?
Moreover, one important characteristic of the new customer is that they are potentially going to advertise your product, mainly by word-of-mouth. Undoubtedly the old customers also can tell their friends about how good your shoes are, but it is limited, since they have limit amounts of friends to talk about, and to break the limit we need to “hire” those new customers.
I would suggest the company to prioritize old customers over new ones in a situation like this. Old customers have long history of repeated purchasing record and they are very likely to stay with the company for the future, whereas new customers are not guaranteed to make another purchase since they might just want to try out a new brand, and it happens to be you. In addition, taking care of old ones help the company to build reputation and gain credits.
A possible solution: Since it’s the only chance get these new clients, If the company wants to try its best to please both sides, they should sell the 50 pairs to the new clients first, which left us with 2 pairs that we can sell it to the 2 nice guys. Then, we promise the old customers that we will send them a pair once its in stock with discount. It’s something very common in ecommerce where if something is out of stock, but the store still allows consumers to place an order under the premise that consumers will have to expect their products to arrive in weeks rather than days.
In this situation, the organization should prioritize supplying the product to existing clients. Customer loyalty can greatly influence a business and its future. Stephan Butscher assessed the necessity and importance of customer loyalty programs. He determined that the basis of utilizing client loyalty is to increase profit and customer retention (Butscher 6). In order to accomplish this, a positive relationship between the organization and the client must be created. Additionally, supporting client loyalty programs can win the organization new clients (Butscher 6). Therefore, prioritizing existing clients versus gaining new clients during a product roll out can end up gaining the organization the new clients they feared they would lose.
It is a risk to prioritize existing clients over new clients. The business will lose the opportunity to gain long desired clients. However, should new clients be prioritized over existing clients, the loyalty of those existing clients is in jeopardy. The benefits of prioritizing existing clients versus new clients outweigh the risks. The loyalty of existing clients should be rewarded for their continued support, and since loyalty is already established, it is the best choice.
I personally think the company should prioritize its new clients. Assuming that this company has provided good products and services throughout the business over the past few years, I think this is a great opportunity for this company to earn more potential customers. You may think it is a risk to prioritize new clients over old clients because retaining your client is important. However, just because they are prioritized does not guarantee that they will be faithful to your brand and will not switch to another brand. Even if you seem to lose old clients at the moment, by reaching out to new clients, the brand could expand its consumer markets and get higher brand awareness in the long run. And If your brand or your business is reliable and has a strong presence in the market, your old customers could be loyal to you and patiently wait for you. For example, if I am a loyal customer of Coca-Cola. Just because Coca-Cola ran out of stock or can’t get a specific product for some reason, I wouldn’t abandon the Coca-Cola brand right on the spot and transfer directly to another brand. I may purchase other brands such as Pepsi for the moment, but just until inventory comes back. This doesn’t mean that I totally just forget about the brand, but I will buy them again when Coca-Cola stock is filled and are available to me.
In this case, my advice is to give priority to old customers with limited inventory. It takes more effort and time to develop one new customer than it does to maintain several old ones, since the company has not yet established a relationship of trust with the new customer and will not build that trust by selling them a popular product at this time. In addition, new customers do not bring higher benefits than old customers. On the contrary, the cost of retaining old customers is much lower. When a company has a large number of loyal customers, the company could spend less money on product promotion and brand awareness. And the cost invested in customer support can be greatly reduced since the customers are already familiar with our products and services. More importantly, if a company chooses to prioritize maintaining relationships with existing customers, the trust with them will be stronger, which will benefit the company in the long run. But it doesn’t mean that the company don’t develop new customers at all. In this case, I suggest that we offer 40 of our 50 inventories to old customers and 10 to new ones.
I belong to the Coca Cola group. While introducing an upgrade in the hero product of Coca Cola, the brand should place this product in the retail stores only as that is where most of our buyers are and should prioritize everyone (new and old)It should sell the product on first come, first serve basis and label it as a “limited edition” and only keep a few bottles/cans in every store. This would benefit the brand in two ways – First, it would lead to consumers wanting more as they would feel like they did not get to try the beverage. Second – It would also let Coca Cola know how many consumers were interested in buying a product that is an upgrade in our hero product because they have seen in the past that launching a new product has not brought in as many sales as the original/hero product does. To increase the demand in the new product even more, Coca Cola should spend more on marketing strategies for this beverage while still labelling it as “LIMITED EDITION” deliberately knowing that they will face issues in supplying it to all it’s new and old consumers. Consumers tend to fall for the word “limited edition” or “limited offer” when it comes to selling any product. Generally, in marketing we have also witnessed that launching an exclusive item surges the demand of the product even more amongst the consumers as it creates curiosity. When they realize they could not get their hands on it, they would feel like they missed out on something. During this time period, Coca Cola can work towards increasing the supply of this new launch internally. Once Coca Cola knows it has left their consumers wanting more of the product, they should create another round of a campaign which should talk about how Coca Cola values all it’s consumers and is bringing the newly launched product once again but this time with enough supply for all.
I would suggest the company needs to prioritize old clients. Since the productivity is limited, it makes the upgraded product become somehow “Limited Edition” or “exclusive”. By prioritizing old clients in this situation, the company builds a sense of exclusivity for their old clients. The company cannot ignore the potential of repeat customers from whom the company can get word-of-mouth advertising. Old clients are more likely to recommend the product to others. This is where familiarity plays an important role. When people feel personally invested in a brand, they feel valued, which is likely to turn into customers telling their friends about their experience with the brand. In addition, repeat customers tend to spend much more than new customers. Therefore, I suggest: 48 for old clients and the rest for new clients (2)
I’m from the Nike team. In this particular situation,Because we don’t have the ability to make all customers get what they want, but maybe we can do our best to make customers less disappointed. I think Nike needs to do as much as possible to satisfy both parties. I will split the 50 pairs in half, 25 pairs will be sold to old customers and 25 pairs will be sold to new customers. But Nike will not take a first-come, first-served basis, so customers may think that Nike is hyping, so as not to increase the bad influence. 50 new customers and 50 old customers will get a number that used to win the chance to buy this new products, but we want to ensure that the probability of each customer getting the shoes is the same and maintain a certain fairness. We can use Nike’s online app SNKRS or offline flagship store for this activity, I think this way customers may attribute it to unlucky.
I think it is more important to maintain old customers, new customers have great instability and need a lot of human, material and financial resources, time and energy to meet the needs of new customers. But old customers are different, you know the needs of old customers, so it is easier to ensure a continuous and stable inflow of benefits. Therefore, I will first meet the needs of old customers and develop two new customers. I am very grateful to the two clients who can understand my current predicament and I am looking forward to working with them next time.
I come from the Apple Team. My option is the new customers for the reason that expanding customer resources is more important to me. Firstly, old customers are inherent and they got used to using Apple’s system and they even have many Apple products which are connecting each other. Even if they can not buy the new product now, they will buy it in the future, because the cost to change all your habits on electronic devices is much higher than the cost of waiting time. Secondly, new customers need to be developed and there is a great development cost in it. Therefore, if my new products can please my new customers especially those I have been fighting for a long time, my customer resources will become 50 old customers + 50 new customers = 100 customers.
In this case, from my point of view, I will prioritize new customers. According to the stated condition, the new clients are those whom I’ve been trying to get for the last decade and this will be my only chance to get them. The primary reason for prioritizing new clients is that if I had missed this opportunity, I might not have had the chance to get these clients again, and gaining these new clients will make my efforts in the last 10 years pay off. Moreover, new clients are the bridge to more customer resources, and it’s likely for us to develop these new clients into loyal customers in the future. For the old clients, I will select around 10 clients who are the worthiest among the 48 to keep supplying my products, and for the rest of the old clients I will try to make some compensations to win them back.
As the decision maker for Pfizer’s COVID-19 vaccine, my choice is to prioritize expanding to new customers, because expanding to new markets is very important for Pfizer given the competitive environment and huge potential market. On the one hand, the global potential market for COVID-19 vaccines is huge, and Pfizer needs to spend more to seize it. Therefore, it is urgent to gain new customers. Furthermore, due to the special nature of vaccines, regular customers choose Pfizer as booster based on product performance rather than marketing. On the other hand, Pfizer continues to invest in R&D to update the COVID-19 vaccine for more and more variants, so it is necessary to get the latest market feedback from new customers.
This answer is for Disney. Disney’s main businesses are in three categories: subscription fees for digital media, theme park tickets and related services, and merchandise sales.
First, for digital media-related business, Disney’s borderline costs can be low. In other words, for this business, there is no budgetary limit for Disney, and it is a matter of more and more, so there is no problem of choosing between new and old customers.
Second, for theme park tickets and related services. Since the load of the service industry is finite, in many peak seasons there will be a situation where demand far exceeds supply. Even in most cases, the loyalty and enterprise value of regular customers is much greater than that of new guests. However, Disney should also take into account the issue of corporate fairness. Therefore, first-come, first-served is a good solution. Disney can open an exclusive online reservation portal for returning guests, and timely email reminders have helped returning customers to complete their online applications more efficiently.
Finally, merchandising has this typical inventory problem. Disney needs to take into account both the loss of repeat customers and the acquisition of new guests that are important to business growth. Therefore, I suggest learning from Qatar Airways’ pricing mechanism. Disney could offer an additional discount (about 10%) to guests who have a history of making purchases. On the one hand, this can strengthen the goodwill of the old customers towards the business. On the other hand, this could discourage new customers to a certain extent, so that the limited inventory can satisfy more consumers in need.
For Disney, the customer prioritization problem usually happens on Disney theme park tickets when it comes to tourism season and Disney merchandise, especially new character merchandise or seasonal/limited editions. As Disney’s 100 years celebration is coming, the 100th-anniversary limited edition merchandise may get demands exceeding the inventory. In this case, I would suggest prioritizing old clients with a certain level of Disney membership to purchase the limited product. However, we should also give new clients a chance to purchase in order to expand our customers.
The strategy I came up with is to provide priority access to old customers, giving them an early bird purchase chance, such as two hours before the official release to everyone. For this early sale, we would use 30% of our inventory. After the early sale ends, everyone will have access to purchase the product during the official release. The rest 70% of the inventory and what has left from the early sale will all be sold at this point, and it’s a first-come-first-serve mode.
By operating this strategy, we can strengthen customer loyalty among old clients, and also expand our market to new customers. In addition, providing priority to old clients with high-level membership can be a way to encourage people to spend at Disney. If they want to get priority, they will try to become old clients of Disney, which enhance customer loyalty.
In this case, I think Jenny should stick to the new customers for two reasons.
Firstly, every company should seize the chance of grabbing new customers into their business. New customers will always bring new energy to a business. Moreover, in a business like selling shoes, old customers might not have as high demand as new customer because they already have one.
Secondly, Jenny is selling her shoes on the plane to New York city. Many people on the plane are in need of new shoes becase of various reasons, such as traveling or coming into a new city. This is her good opportunity to boost the sales.
Moreover, Jenny is running a small business. More people mean more profit, which can make her business larger. And then, she can have more resources and power to maintain her old customers.
In this case, I would recommend prioritizing old customers with limited inventory. Old customers have a long history of making purchases from us, so we can be sure that they are committed to the brand and are trusted customers. When a new product is launched, in order to keep a positive trust relationship, we must first introduce it to our long-term customers since they have been with us for a long period of time, we are more like friends than customers. Moreover, prioritizing old customers does not imply that you will never get new customers. If we think this way, an old customer has a repeated purchases history and she/he shows a strong passion for us, I believe she/he will introduce our brand to friends and families, in this way, we will also gain new customers. Old customers will assist the brand in generating positive feedback from friends and family, which will be more convincing. In this way, compared to those products promoted by people they don’t know well, these new customers are more easily persuaded and more likely to believe in the brand’s products.
Personally, I suppose new customers are as important as existing customers, so the best choice is maybe to randomly select the 50 customers out of 100, which is a fairer approach to all of customers. If the customer is lucky to get the chance to have the shoes this time, it’s excellent. If they are not, we can provide more inventories next time after we checking the popularity of shoes. Those who don’t buy the shoes this time, maybe they can wait for the next time and are randomly selected, which is also likely to increased the brand awareness and appeal to more customers participate in it.
My company is Nike, and I think for this time it’s more important to maintain old customers. For Nike, there are some premium Jordan shoes that are always popular and hard to get, and my old clients may have waited for a long time to have the chance to purchase, thus it will ruin the customer loyalty if the company choose not to supply them. Therefore, all of my old clients will get the company’s supply, because they support the company for a long time, and they are the best group to promote our brand to surrounding people. For the other two products, I will distribute them to two of the new clients, and I will analyze my new clients to find out who have the potential to be my loyal customer since then, and these products will be supplied to them.
In my opinion, I would like to choose to prioritize the new customer. The rationale behind this is the rule that is it can cost five times more to get a new customer than it did to keep an existing customer and the question is specific that “This is only one chance to get these new clients”. So you have to catch the opportunity that you get and this can create the new word of mouth. However this decision might affect the existing customer, and the company can create a campaign that helps to retain the company’s repetition. For example, if the campaign that 50 products for new customers only, this campaign can gain new customers and not make the existing ones feel offended.
Moreover, if some old still feel frustrated we can provide extra promotion such as a discount or making special product for the existing customer for next product launching.
In this specific scenario, I would prioritize existing clients over new clients by the ratio of 70:30, meaning 35 existing clients and 15 new clients who will get the product. It is important to recognize and reward existing clients who have been supporting the business since the beginning. This would strengthen customer relationship and establish greater brand loyalty while creating strong brand advocates who will spread positive word of mouth in their circle of family and friends. As a result, this could potentially lead to acquiring new customers in the future as well. Lastly, for the existing clients who missed out on the opportunity to purchase the product, the company could either offer them exclusive passes to be the first ones to purchase the next time or special discounts voucher for their next purchase. This would help maintain long-term customer relationship. On the other hand, the company has to expand its customer base; therefore, the firm could not neglect the opportunity to secure new clients. For those new clients who missed out, the company could ask for their contact information to notify the next available purchase. This would also allow the company to collect leads and leverage them in the future as well.
Disneyland focuses on customer engagement and creating unique experiences for customers; therefore, prioritizing old customers are as important as new customers. But I would choose to launch new products toward old customers since they have more knowledge about our company as well as other products like the streaming services. The newly launched products could receive stronger publicity after being noticed among old customers. Clearly, the data from Disney’s balance sheet, there is 50% of property, plant, and equipment, and a 5% inventory. A low inventory is caused by Disney’s most popular products are parks itself as well as online services. From a target customer research, Disneyland embodies the full human care and Disney is good at alleviating customers’ moods, which reflects old customers’ loyalty really helps Disney to build a strong market share. And more positive reviews bring more customers. Impressions are very important because they are the primary factor that determines the changing course of a company’s relationship with its customers. Customers form their own opinion every time they have contact with your company in any way. Disney’s business philosophy is to make sure that everything that the public or customers can see is carefully choreographed and presented. Connection builds rapport relationship with the customer. It is much more far-reaching than mere communication and represents the way we build trust, confidence, and loyalty by laying the foundation for a long relationship.
In my opinion, we should supply our new upgraded products to the old clients as priority. There are two reasons, First, they are loyal customers. I understand that the aim for upgrading the most popular product is to expand the market share. However, it is more important to maintain the market share we already had. Loyal customers are more likely to keep purchasing our products after experiencing the upgrading of the product. We do not want to lose their loyalty by offending them. In short term, we can price this upgraded product higher to make more profit. In long term, we want the potential clients to see the benefit of being our loyal customers, which is to be served as priority. So that we can attract more customers to purchase our product in the future. This also leads to the second reason for suppling the old clients first. There are more ways to expand to new markets. Maybe we will be ablet to build up our supply chains to in crease the supply after collecting the profit of this 50 products, so we can sell to more clients in the future.
In such a case, I would reorganize the customers, without distinguishing whether they are old or new customers, because both old and old customers pay for customer acquisition costs, and from this perspective, they are all the same. Also whichever side is chosen the other side will be very angry and may have more unpredictable consequences, for example if new customers are chosen, the old customers will group together on social media to denounce our behavior. Or if we choose the old customer, the new customer will feel disrespected and never choose the company’s products again, and even influence others. So from the above two points of view, no matter which side is chosen will not be a good choice.
To solve the problem we are facing now, I would prefer to open the reservation channel, determine the pre-sale quota, and sell in the order of reservation. The rest of the customers who didn’t grab the pre-sale quota will be registered and visited, and those who didn’t buy the product will be notified in time after the product is restocked, so as to do a good job of customer maintenance.
I think this is better way, which is fairer, and more acceptable and understandable for customers.
According to this case, I would increase the product’s price to make the demand equal to the supply. Since we only have 50 merchandises in stock. We need to maximize our profit, and also this is the way all companies do. For example, the lack of automobile chips causes the MSRP of the vehicle price to increase. Also, I do not agree that the increase in the price will cause old customers to be upset. For example, the premier MileagePlus United Airlines member will also spend more when buying a ticket during a holiday.
In addition, I would use the method of first come first serve. No matter whether you are an old or new customer, everyone should be treated equally. I believe we always need to absorb new customers as a company wants to survive in the market for a long time. If a company always serves the same customer group, the good thing is they have great brand loyalty. However, this company would lose competitiveness in the long term.
In this particular case, I would give priority to new customers over existing ones. From what we know, new customers are the ones we have been fighting for the last ten years and this is our only chance. If we prioritize old clients, we will lose this “only” possibility to expand our customer base. If we can get 48 new clients through this opportunity, it will do more good than harm for the company. And the company will be rewarded for its efforts over the past ten years.
On the other hand, old clients are highly loyal to the company, but it would be difficult to grow if the company only continued to be responsible for these old clients. At the same time, I don’t think that repeat customers will abandon the brand because their needs are not met once. Since I come from the Coca-Cola group, I will use Coca-Cola as an example. As a big Coca-Cola fan, I would not abandon the brand because I didn’t get the latest Coca-Cola one time, instead, I would choose the next opportunity to buy this new product. Overall, I would allocate 48 out of 50 orders to new customers and 2 to existing customers. Of course, I will provide some compensation to the old customers to make up for the company’s choice this time and retain the existing customers to a greater extent.
In this case, I recommend prioritizing older customers with limited inventory. Old customers have long-term buying history with us, so we can be sure that they are trustworthy customers because of their love for the brand and user stickiness. Moreover, for a retail or any kind of selling business the reputation of a business is very important, and old customers always have the right to speak of a company’s reputation. At the same time, old customers have spent so many years in the company, and their loyalty is very important to the sustainable development of the company. Acquiring new customers is also costly and the uncertainty is too risky.
I am from Apple’s marketing team and I think this needs to be analyzed comprehensively from multiple perspectives. I would divide the 50 inventory volume into several parts, 20 to Apple Store customers, whether they are new or existing, on a first-come, first-served basis. The remaining 30 are divided into Wholesalers and Retailers to select the most suitable partner based on the size of their orders, the degree of scale of the platform they are on, the advertising they can provide to Apple, human resources, etc., and the length of the contract signed by both parties.
I choose to comment on the first problem: Prioritizing customers. I am from the Coca-Cola team, I prioritize new customers. Because our old customers have already established business with us and have a high level of customer loyalty, even if we don’t meet their needs this time, we won’t lose them forever. Moreover, Coca-Cola, as a leading company with over 40% market share, large retailers, restaurants, and consumers are very sticky to us. However, new customers have always been the basis of our market expansion, and we need to keep attracting new customers as an FMCG brand. At the same time, Coca-Cola is a large company that has the capacity and space to expand the brand. However, emotional appeasement and compensation for old customers should also be in place. We will only claim to the public that it is our problem that led to the lack of stock and issues a 50% discount on the next order to 50 old customers so that they can feel our sincerity and hold on to old customers.
I think it’s more important to think about existing customers. According to the current business philosophy of my company, McDonald’s, the use of big data tracking of consumers and the convenience of the app to place orders drives repeat purchases. Because of the ease of ordering and our sophisticated data tracking, we have a very high level of customer loyalty. In addition to our own hardware, customer loyalty is closely related to corporate values and the emotional link between the company and the consumer. The number of repeat purchases from repeat customers is definitely much higher than the number of purchases after acquiring a new customer. This is because there is a loyalty and a good emotional link to maintain and cultivate after acquiring new customers. And new products, even if they are left to the old customers, will cause the market to grab. Nowadays, many brands’ users have consumption records, and many limited products are only given to old customers, which is how brands want to give priority to old customers. I think McDonald’s has enough customer base, to avoid the risk of offering new products only to new customers and thus being boycotted by old customers, I prefer to leave the products to old customers.
I will prioritize my old clients more and leave them 35 products. Because for a company’s long-term development, customer loyalty is very important and I need to keep my loyal clients. I will probably rank them by how many products they have bought from me and the first 35 customers can get those new products. For the rest of 15 consumers, I will explain the situation (like tell them because of the supply chain issue we don’t have enough products for sale), give them 8% off coupon to conciliate them and promise they can get the new products next time.
For the new clients, I will leave them 15 products. Although they have never bought my products before, they stand for a huge potential market, so if I want to expand my business, I cannot ignore them. I think limited products can be a good chance if I use proper marketing campaign, because ‘out of stock’ means the products are popular and people will always chase the things they cannot own. Therefore, though most of them cannot get the products this time, they will still place the order next time. And if they try my products and think they are excellent, they will recommend them to their friends and family, hence I can have more customers in the future.
In this case, I will choose a conservative strategy to expand new customers to seek future development while retaining most of the old customers. For this strategy, I would split the 50 inventory among 30 old customers and 20 new customers. For both new and old customers who understand me I will choose not to assign products to them at this time.
When I allocate 30 inventory to regular customers, I will make a reasonable explanation for the remaining 28 customers who do not get inventory. I will attest that this time stock is limited and not everyone has access to it. Secondly, I will explain that the inventory allocation this time is random, and I will provide corresponding compensation to the old customers who do not get the inventory, such as a 10% discount coupon for the next purchase.
Likewise, for the 38 customers who didn’t get stock, I would explain the same to them and give them a 5% discount on their next purchase. By doing this, I think I can gain their understanding and increase the likelihood that they will shop in the future
As for the coca-cola group, I will prioritize new clients for the short term, because acquiring new customers means new growth in the market. If a company wants to develop, it will inevitably require new market space and growth space brought by new customers. Besides, in the coca-cola case, since the old client is already satisfied and loyal to the product, the upgrade might not be as meaningful as it is for them compared to new consumers. As we have our regular product in stock, the demand from old clients would still be covered. However, the upgrade would be a new promotion strategy for the new client to try the product and start to build a relationship with the brand.
But at the same time, it is still important for us to keep an intimate relationship with the old clients in the long term. One strategy is that the brand could explain to their clients that access to the new product is not limited to the old client, but they will get more discounts if they wait. For example, post an announcement explaining that the upgraded product is selling at a regular price for market testing and all clients could buy them in our store, but if you are an old client who has accumulated purchasing credit or has subscribed for the delivery of our product, you could get a free trial of the upgraded product in the next time we release the stock. Or, the old client could get a discount for the next purchase if they invite their friend, the new client, to try on the limited upgraded product. With the strategies, they will understand if they don’t get the new product.
I think in this case it is necessary to give priority to new customers. Because this is the only opportunity to acquire new customers, and there are many ways to make up for offending old customers. A company’s products must continue to attract new consumers in order to provide higher marginal benefits for the entire consumer group, especially in such a situation that it is very difficult to attract new customers. For old customers, the short supply of our company’s products also releases a signal of higher product recognition, and we can appropriately give old customers discounts or more targeted services to make up for it.
In this case, I think I will choose to give priority to those 47 old customers, because loyal customers are treasures, and I will personally explain to her and apologize to her for the old customer I met in the game. I will send the remaining three places to new customers to meet the needs of new customers. Those new customers may or may not be our repeat customers, but those old customers are already our repeat customers. In order to express our gratitude and respect for their continued following with us, I think we should give priority to meeting the needs of our old customers and then try our best to meet the needs of new customers. Customers who are loyal to our brand are our most important customers, old and new.
From this case, I would like to give the priority to those 48 new customers. There are two reasons for supporting.
First of all, those new customer is pretty hard for us to get connected. It’s a good opportunity to let them try our products. If some of them tries and love our products, they will be our brands’ fans and will be a future old customer to our branding. Thus, attracting more new customers is much more important.
Secondly, those 48 old consumers are really familiar with our products and branding. They must love our brands so much. Thus, if we cannot offer them just one time, they will forgive us since they love our products and still buy it in the future.
I think the most important thing about this question is to consider the situation of your company. Because the importance of new users and old customers may be different for different companies. For example, if I open a nail salon, I will pay more attention to old customers, because nails need to be replaced, and old customers will always need them. In other words, their customer lifetime value is very high. But for some companies, like Disney, my favorite, I’d go for new customers. The reason is that Disney is not a necessity for many customers, and it is not a place that they will frequent. So Disney may be in great need of new customers, customers who haven’t been to Disneyland (especially kids).
For JPMorgan Chase Bank, Customers who generate more revenue or profit for the bank are usually considered more valuable and are therefore prioritized. Objectively, we screen for valuable clients who have been active with JPMorgan Bank for a long time and have a relatively high volume of transactions. We do not consider new customers or old customers at all in terms of Customer Prioritization. However, we will focus on old customers for this question. There are some reasons why we say so.
Typically, old customers are considered to be more valuable than new customers, because they already have an established relationship with the bank and are more likely to generate ongoing revenue. Old customers have already had many more transactions in the past than new customers, so they are far more valuable and loyal than new customers. According to my research, many banks have customer loyalty programs or retention programs designed to reward and retain old customers. These programs may offer incentives such as lower fees, higher interest rates, or exclusive offers to long-term customers.
In conclusion, we prefer to provide service and products to old customers in this situation. Old customers are considered to be more valuable than new customers because they are more loyal, had more transitions, had generated more revenue for banks before. Moreover, we are willing to provide some customer loyalty programs or retention programs to keep our old consumers.
I think McDFonald should focus on old customer’s feeling because they spend more money than new customer.Research shows that over time, old customers tend to spend about 300 percent more than new customers. Old customers are also likely to trust your recommendations and buy your more expensive product or service. Second reason is saving cost.Old customers are great brand ambassadors, so you can save on marketing costs; They also recommend 50 per cent more people than one-off buyers. Retaining customers helps build a solid business. A 5% increase in customer retention leads to an average 75% increase in profitability.
In my opinion, McDonald’s should consider old customers. As a brand and company, old customers mean they trust you. 48 old customers have high brand loyalty to your company and trust your products more, which is important for product sales. I can sell products to old customers more easily without more promotion and marketing. In addition, the relationship between old customers and the company is essential. The company has established a connection with old customers to ensure the purchase of products. If I sell burgers to new customers, half of the 48 new customers may not buy, because for them, you are a strange company, and they will not choose to buy a burger which they do not know. Moreover, I need to spend more cost and time promoting products to new customers and finding potential customers, which needs to be considered. Therefore, McDonald‘s should sell new products to old customers, which will help the company’s sales opportunities, strengthen customer relations and establish a strong brand image.
In this case, I think JP Morgan should prioritize its existing customers, which is the first option 48 old clients. As a financial services company, I think its main revenue comes from the loyalty of old customers to them, which also depends on the customer’s service satisfaction with Chase. For example, I recently received an invitation from Chase. If I can deposit $100,000 in time deposits, I will get a 4% annual interest rate. I think it’s very impressive compared to other banks. And that seems to be the prerogative of old customers. So I ended up closing the deal. At the same time, retaining existing customers is often more cost-effective than getting new customers. Because it also involves the competitive advantage with other financial companies like BOA or CITI. Therefore, old customers are more important.
In this scenario, I recommend prioritizing old customers to maintain those loyal customers. It is crucial to establish a sustainable connection with consumers. Prioritizing old customers conveys that we are grateful for their trust, time, and money, it delivers an attitude. And for sure, it helps encourage loyal customers to keep staying with us in the future. However, it is important to explain to new customers that the old customers are prioritized because we want to show appreciation. A sincere apology to new customers is essential as well. While it can be a great loss that we may fail to expand the customer basis this time, potential customers interested in buying the product will also see how much we care about loyal customers. Some may recognize our attitude and come back to purchase in the future.
I also have a bold idea that we can do it randomly (this option is not given in the prompts but was given in the class). We can make it a campaign because the scenario given in the class is a holiday. It can be a special day to place orders on a “first come first serve” basis, and that can make things more interesting and less offensive to old customers. The products can be priced lower than the regular price because this is a holiday event, and we want to make people happy. The campaign may be effective in engaging consumers and helping them understand the brand.
In this case, I think Unilever should first prioritize old customers to keep customer loyalty.
In order to maintain a good relationship with old customers, we can give priority to satisfying their orders. Although giving priority to maintaining the relationship with old customers may lead to fail to attract new customers, Unilever is one of the companies with a large market share in the global fast-moving consumer goods market, so expanding market share is no longer Unilever’s priority goal. Although we choose to develop old customers first, we should also evaluate the important of orders first, because some new customers may benefit more from their orders and have the potential to reach long-term cooperation in the future. At the same time, we should also fully communicate and coordinate with new customers to explain the situation about cannot provide their products first. For example, we can offer some discounts to new customers (such as a 15% discount coupon or a sample of Unilever’s new products)
Apple has been known for its innovative and visually appealing marketing campaigns. The company typically invests heavily in various channels to promote its products and build its brand. Apple uses online channels extensively for marketing. This includes social media platforms, online advertising, and content marketing. The company maintains a strong presence on platforms like Twitter, Facebook, Instagram, and YouTube.
In this case, I believe Nvidia should prioritize its largest firm customers, specifically the 48 loyal clients. These key clients represent significant revenue streams and have been essential to Nvidia’s growth and market dominance. Retaining these large firms is critical, their loyalty not only ensures consistent sales but also strengthens Nvidia’s reputation in the industry.
While there may be potential customers, such as emerging tech companies or large enterprises in sectors like healthcare and automotive, Nvidia’s current market share already covers many of the biggest players in the GPU market. Losing established relationships with its largest clients could threaten Nvidia’s competitive position, especially when these firms often hold substantial purchasing power. Therefore, make sure these important clients receive their orders should be the top priority. By doing this, Nvidia would be able to maintain strong ties with its largest customers while still exploring opportunities with new clients in the future.
I will be using the Disney Store as an example. In this case, I believe Walt Disney should prioritize the 48 new clients in order to help it drive long-term growth. For example, when Disney releases a new hit animation movie and opens a new product line for the new movie, it is very important to attract the new movie fans to buy our product and make them become our loyal customers. Also, prioritizing new customers will help Disney capture emerging customers, especially the younger generation who might not grow up with the traditional Disney content but are drawn to Disney’s new product lines or Disney’s streaming platform. Capturing these new customers’s attention will help Disney provide the new growth opportunities. I believe prioritizing new customers to expand its customer base will help Disney maintain a long-term financial sustainable.
I would prioritize the new clients and provide them the service since this is the only chance to get those new clients . Getting these new clients could open doors to new opportunities and it also open the scope of word of mouth . I would allocate 40 to the new client segment . Then i would try to satisfy as many of the old customers i can with the remaining units . Like i would provide a unit to the lady who i meet at my niece’s soccer game so that there is no awkwardness when i meet her inevitably . i would give the remaining 9 to loyal customers that i have a relationship with and would like to continue have a relationship with in the future . Lastly , i would explain the situation to the remaining clients with honesty as being loyal customers they are more likely to still continue buying my products in the future despite not receiving the product immediately .
I think Jenny should allocate her 50 pairs of luxury shoes using a **balanced strategy**—prioritizing **50% to existing clients (25 pairs), 48% to new clients (24 pairs)**, and **2% to understanding clients (1 pair)**. This approach balances loyalty preservation and growth opportunities:
– Why Existing Clients (50%): Retaining loyal customers safeguards stable revenue ($25k short-term; $125k/year long-term CLV) and prevents reputational risks (e.g., negative word-of-mouth).
– Why New Clients (48%): Capturing new buyers unlocks future revenue ($24k short-term; $72k/year potential CLV) and expands her affluent client network.
– Why Understanding Clients (2%): Compensating unfulfilled clients (e.g., priority access) minimizes dissatisfaction and reinforces brand empathy.
Net Benefit: Sacrificing $1k immediate income avoids $197k in long-term losses (existing churn + missed growth) while maintaining brand trust—proven optimal for sustainable luxury retail growth.
Jenny’s sales strategy should be similar to Tesla’s market approach, both focusing on balancing existing and new customers with limited resources. Jenny prioritizes 35 loyal customers to maintain trust while allocating 13 pairs to new clients for business growth. Likewise, Tesla must balance existing customers like loyal owners and new customers by offering software upgrades, FSD discounts, and premium service to retain loyalty while ensuring supply for new buyers. Tesla also faces supply chain constraints and often prioritizes high-margin models like the Model Y Performance, mirroring Jenny’s strategy of serving high-value customers first. This balanced approach helps Tesla strengthen brand loyalty while expanding into new markets for sustainable growth.
To maximize long-term business value, she must balance old customer and market expansion with prioritizing old customers and save some for new clients.
Based on Luxury Institute’s research, 20% of customers contribute 70% of sales in the luxury industry（top 5% contributes 40%）. In this case, Jenny should prioritize her top 20% loyal customers while using the remaining stock to acquire new clients.
Jenny has 48 long-time clients.
The top 20% (≈10 clients) generate the majority of her revenue and must be prioritized. Then，distribute the Remaining 40 Pairs to New Clients. After reserving 10 pairs for core loyal customers, 40 pairs go to new clients to expand the business. Also, exclude the 2 Understanding Clients, since they are okay with missing out, they are not considered in this round.
I suggest jenny to keep focus on the existing customers.
Firstly, as Jenny runs a relatively small business with limited amount of products and do not plan to expand her business, focusing on obtaining the consumer loyalty and obtain a stable sales performance will help her run her business fluently.
Secondly, it is super risky to turn into new customers for clothes industry as you are still not quite sure about their preferences. It takes time to figure out whether the customers are really into your brand and are willing to invest frequently in your products.
Therefore, I suggest that Jenny says with the current customers.
In the case of whether Jenny should sell shoes to old or new customers, I suggest her to focus on the old customers rather than acquiring new ones. Intuitively, small business (like Jenny’s) relies more on the words-of-mouth. Old customers would recommend her business to friends and family, but when things don’t go well they are also likely to say bad things on her. As her business is selling shoes, which cannot differentiate much from other sellers despite price, the reputation lost would be an enormous impact on revenue. It would also affect the new customer acquisition in the long term. So I think she should prioritize the old customers to strengthen their loyalty towards her rather than eagerly reach out to new ones.
In this situation, I will prioritize selling to our long-time customers. Jenny’s business is not particularly large. Without knowing the new customers, these new customers might only be one-time customers. They are unlikely to make repeat purchases and become long-time customers.
The cost of acquiring new customers is higher than that of retaining existing ones. Long-time customers have already familiarized themselves with Jenny’s brand, have a foundation of trust, and will repurchase products. This reduces the need for communication and introduction, thereby lowering the cost.
Take Disney as an example. Disney also gives priority to their annual pass holders, providing a fast track to enhance the customer experience. Users who purchase the annual pass are themselves regular customers who frequently visit. This approach further increases the stickiness of existing customers.
In this situation, I would have Jenny prioritize the long time clients. This is because I believe by prioritizing old clients this will keep her clients loyal. In an article written by Forbes it states that acquiring new customers might be more expensive. By having prioritized Jenny’s old customers this created brand loyalty because people will buy from brands that they trust. Also by keeping prioritizing her old clients this will reduce the cost of marketing and advertising and reduce the amount of resources she needs. Because she is prioritizing her old clients her new clients might get upset so in that case she can develop a strategy. She can communicate clearly by letting those who don’t get shoes know why and offer that in the future she will make them a priority. She can also include having a waitlist for people that want her shoes. In order to quantify the value of saying yes or no is to analyze both the short and long term financial impacts and consequences. She can also calculate the opportunity cost of prioritizing new or old clients. However overall, I would suggest that she prioritize the old clients since this will create brand loyalty and customer retention.
Source 1: https://hbr.org/1999/11/the-strategic-power-of-saying-no
Source 2: https://www.rho.co/blog/opportunity-cost-formula
Source 3:
https://www.forbes.com/councils/forbesbusinesscouncil/2022/12/12/customer-retention-versus-customer-acquisition/?utm_source=chatgpt.com
Assuming that old customers will remain clients for 3 years while new clients will remain 1 year, and that each old customer can buy 4 pairs per year while new clients buy 2 pairs of shoes per year. Assuming the price of the shoes is $1,000, which is a relatively high-end product.
Based on these assumptions, the expected revenue per long-term client will be $12,000 (3 × 4 × $1,000), and total expected revenue will be $576,000 ($12,000 × 48) if Jenny fully serves the old customers’ demand. The expected revenue per new client will be $2,000 (1 × 2 × $1,000), and the total expected revenue will be $96,000 ($2,000 × 48) if Jenny fully serves the new consumers’ demand.
This comparison of calculations serves as a basis for proportioning how many of the 50 shoes Jenny should allocate to each segment during Christmas, reflecting their importance as customers in terms of future earnings. Total expected revenue from all long-term clients ($576,000) is about six times that from new clients ($96,000).
To conclude with these figures, Jenny should allocate 86% of the shoes (43 pairs) to long-time clients and 14% (7 pairs) to new clients, balancing retention and growth. As for the two understanding clients, Jenny should exclude them for the time.
https://porchgroupmedia.com/blog/customer-acquisition-vs-retention/
https://delighted.com/blog/customer-lifetime-value-formula#what-is-customer-lifetime-value
I think that accepting credit cards would be a beneficial idea for Jenny’s business, as it ultimately has the potential to bring in new clients for her business. This decision could lead to more profit for Jenny, even though there are some downsides to this choice. Both options would have to pay income taxes regardless of the method. With Jenny’s business being smaller, her income would most likely be only around 5%. Maintaining a cash only approach however allows Jenny to retain a bigger margin of profits when selling her shoes, only having to worry about paying income taxes at the end of the year. The drawback would be that she would be limiting her consumer base by only allowing cash when most Americans use credit cards on a daily basis.
With taking credit cards, there are multiple drawbacks, including income taxes, that are apart of the transaction. The first being a processing fee, According to a Forbes article overview, processing fees consist of three main parts; interchange fees, association fees, and processor markup fees. These three components can equal up to approximately 3.5% fees plus $0.20 per transaction. For example, if Jenny sells a pair of shoes for $1,000 to someone who pays with a credit card, should would potentially only profit $964.80. Other drawbacks would include a slower payout rate depending on the credit card company and the potential for fraudulent transactions is higher with credit cards. Although these are major drawbacks, the potential market Jenny has by accepting credit cards will financially outweigh the fees involved. Another Forbes article also states the consumers are two times more likely to make purchases with a credit card rather than with cash. Jenny will have a bigger customer base, more clients willing to purchase, be able to invest in higher inventory counts, and expand her business with the increase in profits overall. Another Forbes article also states the American consumers are two times more likely to make purchases with a credit card rather than with cash.
Sources:
Forbes
Business News Daily
(Did not use AI for this assignment.)
When a company exceeds the supply they can offer their customers, thinking of customer lifetime value (CLV) and loyalty should be the guiding force on who to prioritize, since maintaining a long-term relationship with a client is much more profitable than gaining a new one. As Kumar and Reinartz (2016) note, “It costs significantly less to retain and develop existing customers than to acquire new ones, making customer lifetime value a critical metric in guiding strategic decisions.” Taking this into consideration, Jenny should prioritize her 48 long-time clients as they have proven loyalty, and the cost of losing them would be much greater than the gain from a potential one-time buyer. Recurring customers also represent repeat revenue that comes with strong brand loyalty, and if that relationship is fractured, it could negatively affect brand perception and spread quickly through word of mouth. In this scenario, the two understanding clients are in the best position to wait, as they present the lowest risk to Jenny and could be rewarded later with a discount or future product. For the 48 new clients, I would recommend Jenny identify the most promising ones who are willing to create a long-term relationship with the brand and allocate the leftover inventory to them. If there is no inventory left, my strategy would be to offer them a waitlist spot or even priority access for the next collection to begin building that relationship with potential long-term buyers.
Sources:
Kumar, V., & Reinartz, W. (2016). Creating enduring customer value. Journal of Marketing, 80(6), 36–68. https://doi.org/10.1509/jm.15.0414
In my opinion, Jenny should prioritize her old customers this Christmas season for a couple of reasons. First, studies show that retaining a customer is cheaper than acquiring a new one. According to Forbes, customer acquisition can cost up to 5 to 7 times more1. They also reported that existing customers are 50% more likely to try new products and spend 31% more, on average, compared to new consumers.1
Her long time costumers already trust her business, they’re tried and true consumers, that are loyal and making repeat purchases. On the other hand, it isn’t guaranteed that any potential customers will buy from her more than once. According to Wharton, the probability of selling to an existing consumer is up to 14 times higher than the likelihood of selling to a new one.3
It’s best to not alienate her already established and high value consumers. She should continue building a strong relationship with them and not underestimate the value that loyal consumers bring to her business. In fact, research shows that an increase in customer retention by 5% can lead to a company’s profits growing by 25% to around 95% over a period of time as per Forbes1
Another item to keep in mind is the Customer Lifetime Value. According to Wharton, the CLV is impacted by how engaged consumers are with the brand and how frequently they purchase3
If we consider that she typically sells 10 pairs per month at 1K each and each customer buys at least 4 times 5 years, her CLV would be 20K per costumer. CLV = 1,000 USD (average sale) x 4 (annual visits) x at least 5 (years) = 20K
While Jenny doesn’t truly invest in Sales and Marketing expenses as she doesn’t employ a sales team or pays for advertisement, her Costumer Acquisition Cost (CAC) her Consumer would be zero going by the formula (Total Sales and Marketing Expenses / Number of New Customers Acquired), besides perhaps providing some catering if she wanted to for the new customers that will go to her apartment in December. However, there’s no telling they would make repeat purchases and she’d gain 50K either way while her longtime customers will have at least a 20K CLV. Finally she could give the 2 remaining pair to new consumers test their loyalty and if they will continue to buy from her and for January, she should provide shoes to both customers who said they wouldn’t mind as it is important to keep their business.
What she can do moving forward, as seen in other companies and business, is to establish a referral program, where her old customers bring new ones and in turn her business will expand. This way she can cut customer acquisition costs2 and be certain that new customers will be her core target market with both the ability to pay and with the same fashion/shoe niche interests as their friends.
This word of mouth referral could make her business more exclusive as not everyone will be guaranteed a pair. This could drive up desire and demand. I think she could also implement customer satisfaction surveys with perhaps 1 or 2 questions after each sale. This will allow her to monitor customer sentiment from old customers to prevent them from leaving the brand and any new ones so she could gauge how truly interested they are and if they are worth prioritizing long term.
Finally, she could work on increasing CLV with her customers. One way to do this, as recommended by Wharton3, is to increase the average purchase value. One example would be selling shoes that are brand new or limited-edition items.
Sources:
Forbes
Wharton
IBM
Qualtrics
Wallstreet prep
Jenny should sell to her long-time clients. One reason is that doing so increases customer value instead of lowering it. Since her business is small, retaining loyal clients helps keep the customer base stable while avoiding the high costs associated with acquiring new customers (Hubspot 2024). New customers need time to build trust in the brand (Human Marketing 2025). Jenny can continue to build relationships with her customers by using customer retention strategies. For example, Jenny could add a free small gift with purchases, offer discounts on select items, apologize when mistakes happen, thank customers for their continued support, or set up a referral system (Hubspot 2025). Through referrals, Jenny could attract new customer while rewarding her loyal ones. Her long-time customers are basically the foundation of the business, and losing them could result in significant financial loss (Harvard Business Review 2014). Especially for a small company like Jenny’s, maintaining a low churn rate and high customer value by prioritizing long-time clients is a recommended move to make in this situation.
Sources: HubSpot, Human Marketing, and Harvard Business Review
I’m from the Costco Group, and my comment just my personal advice. My strategy would be to select 48 long-time customers, and the final two given to understanding clients. I believe the core of this supply issue lies in the choice between pursuing short-term profits and maintaining long-term relationships to ensure stable, long-term value. Many brands around the world prioritize allocating products to customers with a long history of purchases and high loyalty when addressing scarcity. This is because the lifetime value of a long-time customer far exceeds the value of a one-time transaction. The value provided by a long-time customer is a certain asset that will continue to increase in value over the future, while the conversions brought by a new customer are a promising prospect, with no certainty of actual future value. Losing a long-term customer, however, not only loses their future guaranteed consumption but also their trust. For a brand, trust is paramount. Customer relationships are long-term assets that generate significant cash flow. According to the customer lifetime value model, betraying a loyal customer has a greater impact on a brand’s long-term performance than harming a new customer. In addition, giving the last two opportunities to a new customer is also to show the new customer our sincerity in wanting to enter a broader market. We hope that through him as a window, more potential new customers will understand that we are a brand that adheres to principles while continuing to expand.
Most leading luxury brands thrive on exclusivity and scarcity which increases desirability and perceived value of the products. Jenny, as a luxury brand’s founder, should follow the same strategy and prioritise her long-time clients while reserving a small selection for new clients which will aid to her long term business success. The risk of offending loyal customers is much higher than costs associated with acquiring prospect customers. However, new customers keep the business growing and help in increasing brand awareness.
Top luxury brands like Rolex or Hermès use wait lists, private sales and selective distribution strategies to drive desirability for new customers while ensuring their long term clients feel valued. Disrespecting loyal clients can damage relationships and brand reputation in the market which makes it a bigger threat than offending new customers. Instead, for new customers Jenny can offer a waitlist or create a special invitation for upcoming exclusive sales that enhances the brand’s perceived value without alienating and disrespecting them.
On the other hand, for loyal customers Jenny should clearly communicate the limited stock of the product selection and that they were offered one due to their brand loyalty, making them feel special and connecting to the brand. She can do this by attaching a special card or message with each product purchase or perhaps sending out an exclusive email letter appreciating their loyalty.
To look at numbers, out of the 50products in inventory, I strongly believe 48 pairs should be given to loyal customers and the remaining 2 should be given to new customers who will contribute to business growth and keep the pipeline open. The 2 ‘understanding clients’ and the remaining new customers can be added on a waitlist or managed via pre-orders.
In conclusion, prioritizing loyal customers increases lifetime value and enhances brand loyalty while strategically accepting a few new customers increases brand awareness and impacts long-term business growth. Both together help in gaining short-term profit and sustaining long-term brand value.
From the perspective of Costco team, I would suggest focusing on long-time clients because customers have their own unique persona, reflecting unique preference and buying behaviour, which makes these long-time clients more valuable to business. Their loyalty potentially increases the value of products, offers a higher customer lifetime value and increases the average customer lifespan. By prioritizing long-time clients can be a guarantee that they will make more purchases consistently over time and build steady revenue.
In this situation there are high liabilities compared to net income, it becomes even more important to focus on existing customers, as the probability of selling to an existing customer is higher than the likelihood of selling to a new customer. This strategy potentially ensures growth of the business equity section and avoids the high marketing and sales expenses reducing future Selling, General, and Administrative (SG&A) costs. On the other hand, new customers often have low commitment in the brand, which requires more marketing effort and relationship building to convert them into loyal buyers. If a new client receives a limited collection it can negatively impact word-of-mouth reputation.
To address this, it is better to focus on loyal customers who help build goodwill. Also, including a storytelling mention about the exclusivity of limited collection, positioning it as a special reward and make them more loyal. The value of this loyalty arises from trust which can be a benefit to the business branding and keeps business positions solid over time.
Source : Wharton
I would suggest Jenny to sell 40 of her shoes to long-time customers, and 10 to new customers. This is because customer retention is as important as customer acquisition. Long-time clients seek for stability, and Christmas is an important occasion. Meaning, Jenny’s long-time clients would be upset and distrust Jenny, because they were not obtain their new pair of shoes. A customer-first mindset needs to be adopted in customer retention. If Jenny were in her long-time clients’ shoes, she would be disappointed for not being offered the product. At the same time, no business can disregard customer acquisition. Attracting new customers are important for demand generation, especially in fashion, where trends are constantly evolving and customers loyalty can be “shaky”. In this case, if deemed possible, Jenny can also apply discount to long-term clients, to give these clients perks. This also applies to Uber where the company give vouchers and faster waiting time for loyal customers.
Source: Forbes
I believe that Jenny shouldn’t only sell her shoes to her current clients, or her new clients. I think she can do a mixture of both. Let me explain. I would suggest Jenny to sell 40 of her pairs of shoes to past clients. This reinforces the trust clients already have with her, and is seen as a good gesture to them for trusting her in the past, enough that she has made enough money from them to buy more shoes for the Christmas season and make more money. Additionally, these guarantees loyalty with them and elevates the chance that they would be willing to buy from her in the future. I would then suggest Jenny to sell 2 pairs of her shoes to new clients. By doing this, she’s not shutting her business to new potential buyers and can give new people a “taste” of what she offers. Exclusivity/limited availability tend to sell more. The clients who didn’t get shoes will notice that both old clients and new ones did get one, and will feel like they need to get their hands on the next shipment. She can do this by changing the narrative from “I didn’t buy enough shoes for everyone, sorry” to “this is a holiday exclusive sale and only a certain amount of people will get the chance to get their hands on them.” New clients can view the old clients as a “club” they also want to belong to. Jenny can take advantage of that by giving present clients an offer to pre-order for the next launch. This gives Jenny an advantage because she can already get the money needed for the new shoes, and bring back more the next time she goes to China. Marketing is a battle of perceptions, not reality, so by changing the perception and narrative, Jenny can end up making more business in the long run. Assuming that the majority of new clients are happy, they might be inclined to share positive word-of-mouth about the product. I think the key here is that Jenny needs to effectively communicate this to avoid angering her clients and also incentivize the new clients to come back if they didn’t get the chance to get their hands on the shoes.
I think for the Jenny’s case, my opinion is she should maintain core relationships with existing clients because they have proven customer lifetime value, and alienating them means losing guaranteed future revenue. Jenny should give 48 pairs first to old customers. She should avoid immediate, negative word-of-mouth that could damage the brand’s exclusive image which customers already trust. Then, Jenny can give 2 pairs to new customers because it secures at least a few new customers for future growth, and making them the second priority does not reduce engagement compared to existing customers.
This strategy prioritizes retention over acquisition because retaining existing, high-value customers is less expensive and more profitable than acquiring new ones. The high price point ($1,000) suggests a brand built on exclusivity and service; failing loyal customers contradicts this brand promise.
Quantifying each client’s value involves calculating their Customer Lifetime Value (CLV), the total projected revenue and referrals a customer will bring over time, not just the immediate sale. To manage communication for customers who do not get a pair, Jenny can provide personalized communications and future incentives for those who miss out: exclusive invitations to future launches, apologies paired with loyalty perks, offers for custom orders, and publicly highlight the values Jenny upholds (quality, exclusivity, customer care, ethical promise) to reinforce brand ethos in moments of scarcity.
Quantifying the strategy via CLV-based segmentation and ethical prioritization will ensure Jenny protects her business, brand, and reputation, which is essential in the luxury market.
Source: Forbes and PwC
If I were Jenny, I would definitely prioritize my long-time clients first while keeping a small allocation for high-potential new buyers. The thing is in the luxury sector, repeat customers generate 60–70 % of revenue and retaining them costs far less than acquiring new ones. Research in the Harvard Business Review (2024) also notes that losing loyal customers erodes brand equity faster than any marketing campaign can rebuild it. Serving her existing clients first protects trust, reputation, and long-term profit.
Still, ignoring new demand would limit business growth. I believe a balanced split, 60 % of pairs to returning clients, 38 % to select new ones, and 2 % to the two understanding customers would preserve loyalty while expanding her reach. If her loyal base buys just two more pairs a year due to exclusivity, that adds roughly $100,000 in predictable revenue. McKinsey’s “State of Luxury” insights emphasize that in luxury markets, brand consistency and exclusivity drive sustainable growth—even if that means limiting new-customer intake in the short run. By communicating scarcity transparently and creating a priority-list or pre-order system, Jenny can turn limited supply into brand prestige. Luxury thrives on exclusivity, saying “no” wisely today builds stronger demand tomorrow.
Sources:
https://hbr.org/2024/02/maintaining-customer-loyalty-in-the-face-of-inflation
https://www.mckinsey.com/industries/retail/our-insights/state-of-luxury?