Bonanza Real Estate is considering enrolling in Rush Corps Customer Value Seminar, a $2,000 per person, week-long
Question:
Bonanza Real Estate is considering enrolling in Rush Corp’s Customer Value Seminar, a $2,000 per person, week-long intensive seminar that teaches sales staff to build customer satisfaction and loyalty and to sell products more effectively by understanding customers’ needs. Rush Corp advertises a money-back guarantee if its sales seminars do not pay for themselves in increased profits so long as new employees also are trained. Bonanza will send its entire sales force of 100 to the seminar in the current year and its new employees each year thereafter for five years. The company normally experiences annual turnover in sales personnel of 20 percent; its annual cost of capital is 10 percent.
Required What equal, annual net benefit must Bonanza Real Estate experience to validate Rush Corp’s moneyback guarantee over this six-year period? (Ignore taxes.) Prepare a spreadsheet analysis of the costs and benefits of Bonanza’s proposed customer service improvements. Be prepared to present your analysis.
Step by Step Answer:
Cost Management Strategies For Business Decisions
ISBN: 12
4th Edition
Authors: Ronald Hilton, Michael Maher, Frank Selto