Assume that a customer in the small contractor target market segment buys an electric drill on average every two years (or every 0.5 year) for $200, when the gross margin on the drill averages 20 percent. Questions 1. What is the value of a loyal customer (VLC) if the customer retention rate is 50 percent? Round your answer to the nearest cent. $ 2. What is the value of a loyal customer (VLC) if the customer retention rate increases to 75 percent? Round your answer to the nearest cent. $ 3. What is a 1 percent change in market share worth to the manufacturer if it represents 150,000 customers? Round your answers to the nearest dollar. 50 percent customer retention rate case: $ 75 percent customer retention rate case: $ 4. What do you conclude? If customer retention can be increased from 50 to 75 percent through better value chain performance, the economic payoff is _________doubledquadrupled.
Assume that a customer in the small contractor target market segment buys an electric drill on average every two years (or every 0.5 year) for $200, when the gross margin on the drill averages 20 percent.
Questions
1. What is the value of a loyal customer (VLC) if the customer retention rate is 50 percent? Round your answer to the nearest cent.
$
2. What is the value of a loyal customer (VLC) if the customer retention rate increases to 75 percent? Round your answer to the nearest cent.
$
3. What is a 1 percent change in market share worth to the manufacturer if it represents 150,000 customers? Round your answers to the nearest dollar.
50 percent customer retention rate case: $
75 percent customer retention rate case: $
4. What do you conclude?
If customer retention can be increased from 50 to 75 percent through better value chain performance, the economic payoff is _________doubledquadrupled.
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