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2. 20 points As the promotion manager of a retail clothing store, you are planning to invite some of your customers to a promotion using
2. 20 points As the promotion manager of a retail clothing store, you are planning to invite some of your customers to a promotion using direct mail. You have decided to use RFM method to select potential customers to be invited. The response chart shown below was obtained from data from the previous promo. Total number of customers in your portfolio is 10,000. The cost of producing direct mail material and delivering the direct mails is $1.50/mail. Estimated revenue from every responding customer is $20. The objective of this promotion is to maximize profit. Your task is to propose which customers to be selected for the promo, based on the RFM score and your promotion objective. Perform the cost analysis and determine which customers you want to select. Show your calculations. Customer Group RFM Score Invited Customer Response Rate Cummulative Response Rate 30% 29% 1 >255 2 3 28% 27% 4 5 25% 209-255 195-208 179-194 156-178 129-155 109-128 97-108 75-96 255 2 3 28% 27% 4 5 25% 209-255 195-208 179-194 156-178 129-155 109-128 97-108 75-96
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