Question 1: What are the Acquisition Costs per Customer for List 1. (Show calcul

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Question 1: What are the Acquisition Costs per Customer for List 1. (Show calculation)

Question 2: What are the Acquisition Costs per Customer for List 2. (show calculation)

Workbench, a regional home improvement store is in the midst of its planning process for next year.A recent segmentation analysis of those customers that have registered in their loyalty club revealed an important segment, Occasional Shoppers.
The newly hired VP of Customer Analytics would like to further penetrate the ‘Occasional Shopper’ segment, but she wants to manage the Average Acquisition Costs per Customer.
Given the availability of two possible lists of ‘Occasional Shoppers’, answer the following questions. Table 1: List Evaluation List Costs per Name Production and Mailing Costs per Mailing Total Costs to Contact One Person Expected
Response Rate Acquistion Costs per Customer List 1 $6 $3 1% List 2 $23 $3 2%

Question 1: What are the Acquisition Costs per Customer for List 1. (Show calculation)

Question 2: What are the Acquisition Costs per Customer for List 2. (show calculation)

Question 3: Which of the following lists should be purchased from the List Broker (company that sells lists of prospective ‘Occasional Shoppers’) to minimize the Acquisition Costs per Customer ? Explain your Answer.

Explanation / Answer

1. Total costs to contact one person = 6+3 = 9$

Acquision cost per customer = 9*100 = 900$ because the reponse rate is 1%

2.Total costs to contact one person = 23+3 = 26$

Acquision cost per customer = 26*50 = 1300$ because the reponse rate is 2%

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