Average order: $ 535 Frequency of orders: 1.6 /year Average margin: 60 % markup on retail Customer retention rate: 62 % costs/yr $ 31 Promotional/communication Your discount rate: 11 % Customer acquisition cost $ 177 What is the maximum amount your firm can afford to spend to increase customer retention from 62 % to 78 %? Report your answer rounded to the nearest dollar. To answer the question, calculate CLV at the higher retention rate and subtract the CLV at the lower retention rate. The difference will be the maximum amount the company can afford to spend to increase customer retention.
Average order: $ 535 Frequency of orders: 1.6 /year Average margin: 60 % markup on retail Customer retention rate: 62 % costs/yr $ 31 Promotional/communication Your discount rate: 11 % Customer acquisition cost $ 177 What is the maximum amount your firm can afford to spend to increase customer retention from 62 % to 78 %? Report your answer rounded to the nearest dollar. To answer the question, calculate CLV at the higher retention rate and subtract the CLV at the lower retention rate. The difference will be the maximum amount the company can afford to spend to increase customer retention.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 41E
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