Retail Relay Text Exercise Guidelines
The authors of your text offer the following overview for the case being used in this module.
Retail Relay, an Internet-based business that sources grocery products from local grocery stores, boutique food retailers, and local farms, and then delivers customer orders to conveniently placed pick-up locations, is trying to determine the profitability of various promotional plans that it has piloted. Central to this analysis is an understanding of the expected profitability of a newly acquired customer. The company is considering expanding its services from one small city to include a larger city.
Prompt: Many times, relationships between variable are nonlinear or S-shaped and need to be modeled through binary choices of 1 and 0 instead of continuous data. Logistic regression goes beyond simple purchase figure and frequency data. By completing this assignment, you will gain a clearer understanding of the importance of calculating the CLV. A key component of CLV is retention rate. But retention does not come for free. Notice that the later questions ask you to evaluate how the retention cost will affect the CLV. A promotional campaign should be run only if the results work in the company's favor. The questions for this assignment are from Module Six and can be found on page 168 of the textbook.
This case requires students to compute basic customer lifetime value (CLV) metrics and analyze the potential profitability of direct-to-consumer promotions. Accompanying the case is a student spreadsheet Retail Relay Data Set that contains the customer-level purchase information students will need to analyze the case. Answer the following questions:
Questions for Retail Relay
1. What is the expected customer lifetime value of a newly acquired customer? Use an annual discount rate of 10%.
2. Do you think this value is likely to increase or decrease as Retail Relay grows into a larger company?
3. Is the Valpak promotion worth pursuing at a larger scale? What about door-hanger coupons?
4. Would you recommend any adjustments to the company's social media marketing campaign?
5. Should Retail Relay move forward with the Richmond expansion?
Retail Relay Revisited: Take time to study Exhibit 14.1 (p. 182), where you will find many variables that are not continuous but may have a better relationship with customer retention rates. The question for this assignment can be found on p. 182 of the textbook. The data set for this question can be accessed here.
Question for Retail Relay Revisited
1. Would logistic regression analysis reveal the keys to improving customer retention? Retail Relay has customer data on variables described in Exhibit 14-1 on page 182 of the textbook.
Attachment:- Data relay.rar