A retailer identified 115,000 customers “at risk“ of leaving per month, and the customers that do leave equals 25,000 per month. They are thinking of applying a 2% discount to the “at risk” accounts, in order to prevent churn. How many customers should this discount be able to prevent churning in order for it to make sense? Revenue per Chstomer : $100, and Profit margin is 10%
Answe: 22,250 (how did they get here?)
Hi there,
I think we're missing the info here.
I need to understand how much these customers pay. Otherwise, I can't measure the 2% and it's impact to profit.
Essentially, this is a breakeven. You need to multiply the 2% with the customers to figure out the cost. Then, you need to multiply the # customers saved by the amount they spend. This is worth it if the latter calculation is greater than the former.
Make sense?
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