Average credit card expenditure estimation

VISO
New answer on Jan 03, 2020
2 Answers
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Markus
Premium
Certified
asked on Dec 31, 2019

Hey community,

the case VISO asks for an estimation of revenues for a client with an annual income of 30,000 EUR. It requires to assume how much a customer spends on average of his or her income via credit card and the case assumes 45%. How is this justified, especially because we are not given any hints from which countries the customers are from. The solution provides no further justification for this number.

Can anyone share ideas how to get this estimation without directly asking the interviewer for the number?

Many thanks and kind regards
Markus

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Luca
Expert
Content Creator
replied on Jan 02, 2020
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hello Markus,

When there is a data written without explanation like this, you can consider it as a data that you can ask your interviewer.

Anyway I agree with you: it is a complex and crucial data and it's weird to directly ask your interviewer that value. In order to make a quick estimation of that number I would divide the population in segments by age, estimating the percentage paid by credit card per each group (I expect that 20-40 years old use credit card more often than people over 40).

Then you can also add some complexity and state some further aspects to be considered, such as the average income of each segment. In fact 40-60 y/o people have an higher purchasing power than younger people, so that segment should weigh more in the total average.

Does it make sense?

Hope it helps,
Luca

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Clara
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replied on Jan 03, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I agree with you that this number seems a bit "random".

However, the 1st thing that I would do is directly ask the interviewer something like "do we take this number as source of truth or shall we do a quick check is it seems accurate enaugh?" It could be that you indeed need to test a bit, but it could also be that is totally irrelevant for the interviewer since he/she wants you to focus on other stuff and take that number for granted.

HOpe it helps.

Cheers,

Clara

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Luca gave the best answer

Luca

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