In this example, when the contribution margin is $0\mathrm{.}6,$ the probability of a purchase per year is $0\mathrm{.}5,$ and the defection rate is $0\mathrm{.}4,$ what is the approximate value of a loyal customer?

a$.1,500$

b$.750$

c$.600$

d$.1,125$

If the defection rate doubles, what is the effect on the value of a loyal customer $($VLC$)?$

a$.$ VLC does not change.

b$.$ VLC is reduced by $50\%.$

c$.$ VLC doubles.

d$.$ The effect depends on the values of CM and RF$.$

Which of the following will double the value of a loyal customer?

a$.$ Double the Contribution Margin

b$.$ Double the Repurchase Frequency

c$.$ Reduce the Defection rate by $50\%$

d$.$ Each of these options will double the VLC