List and briefly describe the factors that justify why loyal customers are profitable
What will be an ideal response?
a. Acquisition cost – the incremental cost of getting a new customer.
b. Base profit – The longer a customer is retained, the longer the base profit is earned.
c. Revenue growth – retained customers have been found to increase their purchase quantities over time.
d. Operating costs – existing customers cost less to serve than new customers.
e. Referrals – loyal customers talk to their friends and neighbors about your company.
f. Price premium – loyal customers are often more price insensitive than customers who need a price inducement to switch or to become a new customer.
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