Torsten Pieper, president of a family-owned business with a total of seven stores in different towns in Germany, believes the company needs to create a customer loyalty program designed to reward customers who spend more than €200 per shopping trip. Therefore, he asks his younger sister to create a program that can help the company identify and profile its most profitable customers. When the report is completed, the data indicates the more affluent shoppers who spend more than

€200 per shopping trip represent only a small part of the company’s overall sales because they shop only three to four times a year and tend to buy only lower margin designer clothing. The report, however, notes that the most profitable store customers tend to be over forty years old and from average income households. They shop at least twice a month, spending an average of €100 per trip on everything from cosmetics to housewares to high margin private label clothing.

After reviewing the report, Torsten nonetheless decides he wants the customer loyalty program to reward the high-dollar purchase customers, justifying the decision by claiming they are responsible for the store’s upscale image that appeals to the regular store customer.

What do you think about Torsten’s decision?