What is the average value of a loyal customer (VLC) in a target market segment if the average purchase price is $75 per visit, the frequency of repurchase is six times per year, the contribution margin is 10 percent, and the average customer defection rate is 25 percent?
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 percent) and the frequency of repurchase varies between three and nine times per year (in increments of one year). Sketch graphs (or use Excel charts) to illustrate the impact of these assumptions on the VLC.