Average value of loyal customer in target market segment

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Reference no: EM132273437

1. What is the average value of a loyal customer (VLC) in a target market segment if the average purchases price is $75 per visit, the frequency of repurchase is 6 times per year, the contribution margin is 10%, and the average customer defection rate is 25%?

2. Using the base case data in question 10, analyze how the value of a loyal customer (VLC) will change if the average customer defection rate varies between 15 and 40 percent (in increments of 5%) and the frequency of repurchase varies between 3 and 9 times per year (in increments of 1 year). Sketch graphs (or use Excel charts) to illustrate the impact of these assumptions on the VLC.

3. What is the average defection rate for grocery store shoppers in a local area of a large city of customers spend $45 per visit, customers shop 52 weeks per year, the grocery store has a 4% gross margin, and the value of a loyal customer is estimated as $3,500 per year?

Reference no: EM132273437

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