Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A regional electrical distributor currently has 1 , 0 0 0 customers who buy an average of $ 5 , 0 0 0 per year,

A regional electrical distributor currently has 1,000 customers who buy an average of $5,000 per year, generating a 50% margin. From experience, the company knows that 20% of its customers will not return the next year and it takes an average of $500 to acquire each new customer. Given the choice of 1) investing $50,000 in a new customer acquisition program for 100 additional customers or 2) investing $50,000 in a new retention program which would take the rate of retention from 80% to 85%, what should the company do?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Strategic Management

Authors: Martyn R Pitt, Dimitrios Koufopoulos

1st edition

978-1849201872, 1849201870, 978-1260092271

More Books

Students also viewed these General Management questions