What is the maximum compensation dryclean

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Reference no: EM133340282

Question: For a dryclean store, a customer spent an average of $25 per week on dry cleaning. The profit margin for DryClean Express stores was on average 20 percent. Customers on average have a life-cycle of 7 years after which they move. The customer who is dissatisfied has already been a customer for 2 full years. Satisfied customers who have been with the company for two years have on average a 10% chance of churning every year and going to competing dry cleaners. Dissatisfied customers leave immediately. The dissatisfied customer in this case can be satisfied if the company acquiesces to the customer's demand and offers the $300 cash compensation. Using this information, should DryClean express offer the $300 cash compensation? What is your advice? What is the maximum compensation DryClean should be willing to give?

Reference no: EM133340282

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