A Computer Manufacturer Currently Has a 15 Percent Customer Defection

Essay

A computer manufacturer currently has a 15 percent customer defection rate.Their accounting department estimates the incremental contribution to profit and overhead as 30 percent.Customers purchase computers every four years at an average cost of $1,200.00.In an effort to reduce the defection rate, the company is improving both the quality of its computers and its post-sale service.Determine the increase in the average value of a loyal customer if the defection rate drops to 5 percent.