Assume that a customer in the small contractor target market segment buys an electric drill on average every two years (or every 0.5 year) for $150, when the gross margin on the drill averages 50 percent. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

Questions

1. What is the value of a loyal customer (VLC) if the customer retention rate is 60 percent? Round your answer to the nearest cent.

$ fill in the blank 2

2. What is the value of a loyal customer (VLC) if the customer retention rate increases to 80 percent? Round your answer to the nearest cent.

$ fill in the blank 3

3. What is a 1 percent change in market share worth to the manufacturer if it represents 50,000 customers? Round your answers to the nearest dollar.

60 percent customer retention rate case: $ fill in the blank 4

80 percent customer retention rate case: $ fill in the blank 5