Questions answered in this chapter:
A credit card company currently has an 80 percent retention rate. How will the company’s profitability improve if the retention rate increases to 90 percent or higher?
A long-distance phone company gives the competition’s customers an incentive to switch. How large an incentive should it give?
Many companies undervalue their customers. When valuing a customer, a company should look at the net present value (NPV) of the long-term profits that the company earns from the customer. (For detailed information about net present value, see Chapter 7.) Failure to look at the long-term value of a customer often causes a company to make poor decisions. For example, a company might cut ...