1. The behavior of individual adopters of the card will vary in how much they spend,...

 

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1. The behavior of individual adopters of the card will vary in how much they spend, whether they pay all of their charges in full each month, and whether they churn (i.e., whether they renew their card annually or not). As noted on the top of page 3 in the case, three customer archetypes were transactors, revolvers, and dormants. Assuming the following for each type of customer, how can the Chase Sapphire team best design its product and brand to attract the right customers, i.e., calculate the typical CLV for each type of customer? Has Chase attracted the right customer the Chase Sapphire Reserve? Why or why not? • Transactors/Revolvers: Both spend $16,000 per year Credit balance carried: $0 for transactors, 50% of annual spend for revolvers • • Interest rate average: 21% • Renew the card at $450 annual fee Dormants: • Spend only enough to earn the sign-on bonus • Credit balance carried: $0 • Do not renew card at $450 annual fee 1. The behavior of individual adopters of the card will vary in how much they spend, whether they pay all of their charges in full each month, and whether they churn (i.e., whether they renew their card annually or not). As noted on the top of page 3 in the case, three customer archetypes were transactors, revolvers, and dormants. Assuming the following for each type of customer, how can the Chase Sapphire team best design its product and brand to attract the right customers, i.e., calculate the typical CLV for each type of customer? Has Chase attracted the right customer the Chase Sapphire Reserve? Why or why not? • Transactors/Revolvers: Both spend $16,000 per year Credit balance carried: $0 for transactors, 50% of annual spend for revolvers • • Interest rate average: 21% • Renew the card at $450 annual fee Dormants: • Spend only enough to earn the sign-on bonus • Credit balance carried: $0 • Do not renew card at $450 annual fee

Answer rating: 100% (QA)

Answer To calculate the Customer Lifetime Value CLV for each type of customer Transactors Revolvers ... View the full answer