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How would net marketing contribution change if the customer retention changed to 75%?

How would net marketing contribution change if the customer retention changed to 75%?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  1. How would net marketing contribution change if the customer retention changed to 75%?
FIGURE 1-8 CUSTOMER RETENTION AND PROFITABILITY 70% Customer Retention Sales and Profit Performance Retained Customers Lost Customers New Customers Overall Performance Sales (millions) 70,000 30,000 30,000 100,000 Revenue per Customer $1,000 $300 $500 $940.0 Sales (millions) $70.0 $9.0 $15.0 $94.0 Percent Margin 45% 35% 30% 42% Gross Profit (millions) $31.5 $3.2 $4.5 $39.2 Marketing & Sales Expenses per Customer $100.00 $50.00 $500.00 $180.77 Marketing & Sales Expenses (millions) $7.0 $1.5 $15.0 $23.5 Net Marketing Contribution (millions) $24.5 $1.7 -$10.5 $15.7 Other Expenses (millions) $10.0 Profit Before Tax $5.7 Pre-Tax Return on Sales 6.0% Retained Customers Overall 80% Customer Retention Sales and Profit Performance Lost Customers New Customers Performance Number of Customers 80,000 20,000 20,000 100,000 Revenue per Customer $1,000 $300 $500 $960.0 Sales (millions) $80.0 $6.0 $10.0 $96.0 Percent Margin 45% 35% 30% 43% Gross Profit (millions) $36.0 $2.1 $3.0 $41.1 Marketing & Sales Expenses per Customer $110.00 $55.00 $500.00 $165.83 Marketing & Sales Expenses (millions) $8.8 $1.1 $10.0 $19.9 Net Marketing Contribution (millions) $27.2 $1.0 -$7.0 $21.2 Other Expenses (millions) $10.0 Profit Before Tax $11.2 Pre-Tax Return on Sales 11.7%
Transcribed Image Text:FIGURE 1-8 CUSTOMER RETENTION AND PROFITABILITY 70% Customer Retention Sales and Profit Performance Retained Customers Lost Customers New Customers Overall Performance Sales (millions) 70,000 30,000 30,000 100,000 Revenue per Customer $1,000 $300 $500 $940.0 Sales (millions) $70.0 $9.0 $15.0 $94.0 Percent Margin 45% 35% 30% 42% Gross Profit (millions) $31.5 $3.2 $4.5 $39.2 Marketing & Sales Expenses per Customer $100.00 $50.00 $500.00 $180.77 Marketing & Sales Expenses (millions) $7.0 $1.5 $15.0 $23.5 Net Marketing Contribution (millions) $24.5 $1.7 -$10.5 $15.7 Other Expenses (millions) $10.0 Profit Before Tax $5.7 Pre-Tax Return on Sales 6.0% Retained Customers Overall 80% Customer Retention Sales and Profit Performance Lost Customers New Customers Performance Number of Customers 80,000 20,000 20,000 100,000 Revenue per Customer $1,000 $300 $500 $960.0 Sales (millions) $80.0 $6.0 $10.0 $96.0 Percent Margin 45% 35% 30% 43% Gross Profit (millions) $36.0 $2.1 $3.0 $41.1 Marketing & Sales Expenses per Customer $110.00 $55.00 $500.00 $165.83 Marketing & Sales Expenses (millions) $8.8 $1.1 $10.0 $19.9 Net Marketing Contribution (millions) $27.2 $1.0 -$7.0 $21.2 Other Expenses (millions) $10.0 Profit Before Tax $11.2 Pre-Tax Return on Sales 11.7%
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