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What is the average value of a loyal customer

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Reference no: EM132978101

1.) What is the average value of a loyal customer (VLC) in a target market segment if the average purchase price is $75 per visit, the frequency of repurchase is six times per year, the contribution margin is 10 percent, and the average customer defection rate is 25 percent?

2.) Using the base case data is question 1, analyze how the value of a loyal customer (VLC) will change if the average customer defection rate varies between 15 and 40 percent (in increments of 5 percent) and the frequency of repurchase varies between three and nine times per year (in increments of one year). Sketch graphs (or use Excel charts) to illustrate the impact of these assumptions on the VLC.

3.) What is the average defection rate for grocery store shoppers in a local area of a large city if customers spend $45 per visit, customers shop 52 weeks per year, the grocery store has a 4 percent gross margin, and the value of a loyal customer is estimated at $3,500 per year?

Reference no: EM132978101

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