Which of the Following Statements Is True About Customer Retention

question 38

Multiple Choice

Which of the following statements is true about customer retention and customer life expectancy?

• A)The higher the customer retention rate,the lower the short-term profit impact.
• B)As customer retention increases,the customer's life expectancy decreases.
• C)Customer life expectancy decreases exponentially with customer retention.
• D)In general,it costs five times more to replace than to keep a customer.
• E)Higher levels of customer retention have a long-term negative impact on profits.

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Definitions:

Flexible Budget

A flexible budget adjusts based on changes in the volume of activity, allowing for a more accurate comparison of actual to budgeted performance.

Tenant-Days

The total number of days rented across all properties within a specified timeframe, used for calculating occupancy rates and revenue in the hospitality or rental sector.

Administrative Expenses

Costs related to the general operation of a business that are not directly tied to the production of goods or services, such as office supplies, salaries of administrative staff, and utilities.

Planning Budget

A budget prepared for a particular level of activity; it can be adjusted for various levels of operations, and it aids in the planning process.