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By improving customer intimacy, suppliers reduce price sensitivity and increase the amount they can charge customers. For example, by offering their customers overdraft protection, banks increase the utility credit card holders see in staying with them. Another advantage is that credit card companies cannot offer the same type of insurance. Another familiar example is AOL's strategy. AOL distributes thousands of CDs with their software and 6 months of free service. Their correct assumption is that once a customer has an account with their own email, a buddy list and other features, the willingness of customers to switch Internet provides is significantly reduced...
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