A 5% Reduction in the Customer Defection Rate Can Increase

question 143

Essay

A 5% reduction in the customer defection rate can increase profits by 25% to 85%,depending on the industry.Explain how this is so.

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Definitions:

LIFO

LIFO, or Last In, First Out, is an inventory valuation method where the last items to be added to inventory are assumed to be the first ones sold.

Ending Inventory

The total value of a company's merchandise, goods, and products held at the end of an accounting period.

Sales Revenue

The income received by a company from its sales of goods or the provision of services.

Gross Profit

The difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments.