A critical issue for service companies is how many customers cancel. Some wireless carriers lose an average

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A critical issue for service companies is how many customers cancel. Some wireless carriers lose an average of 3% of their subscribers each month. Should companies spend more effort getting new customers or trying to win back old customers who left? Researchers have argued that it is easier and cheaper to lure back customers. One telecom firm tested four win-back offers. Their offers and their costs are listed next.

1. Discount offer: $20 off for 6 months. Cost $120

2. Upgrade offer: a $35 movie channel for 3 months. Cost $105

3. Bundled offer: $20 off for 6 months, plus a $35 movie channel free for 3 months. Cost $225

4. Tailored offer: Customers who left over price get the discount; customers who left over service get the upgrade. Cost $120/$105

A random sample of customers who left was drawn and one-quarter received one type of offer. The responses were recorded where 1 = took the offer and 2 = did not take the offer. Can we infer at the 5% significance level that there are differences in success rates between the four win-back offers? Use a 5% significance level.

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