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k10 × re https://blackboardwccnetedu/webapps/assessment take/launchjsp?course assessment id-329386-1& a ? ® ? ? G s Question Completion Status: QUESTION 4 2 points Save Answer A guest at Raphael's Italian Restaurant generally spends $250 on a meal. Most of Raphael's customers are locals and eat at the restaurant twice a month. If the restaurant's margin is 50 percent, and a loyal customer is estimated to be etermine the average defection rate. Use the VLC template. Copy and paste your answer here. ? 3(12pt) ??·?·T .,.. Q? T T T ? Paragraph ? Arial HTHL 05S words:0 A Path: p 2 points Save Answer QUESTION5Explanation / Answer
To be calculated:
Average defection rate (DR)
Formula used:
VLC = (P) x (RF) x (CM) x (BLC)
where,
VLC = Value of loyal customer
P = Revenue per unit
RF = Repurchase frequency
CM = Contribution margin
BLC = Buyer’s life cycle
Also,
BLC = (1 / DR)
where,
DR = Defection rate
Therefore,
VLC = (P) x (RF) x (CM) x (BLC)
VLC = (P) x (RF) x (CM) x (1/DR)
Given values:
Value of loyal customer, VLC = $4000
Revenue per unit, P = $250
Repurchase frequency, RF = 2 times per month = 24 times per year
Contribution margin, CM = 50% = 0.50
Putting the given values in the above formula, we get;
VLC = (P) x (RF) x (CM) x (1/DR)
$4000 = ($250) x (24) x (0.50) x (1/DR)
DR = 3000 / 4000
DR = 0.75
Average defection rate = 0.75
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