Home › BC Graduation Assessments › English › Reading Comprehension › Read these lines: "In general, the longer a cust…
Read these lines: "In general, the longer a customer stays with a company, the more that customer is worth. Long-term customers buy more, take less of a company's time, are less sensitive to price, and bring in new customers. Best of all, they require no acquisition or start-up costs. Good long-standing customers are worth so much that in some industries, reducing customer defections by as little as five points can double profits." What is the main point of the quoted lines?
ANew customers matter more than old ones because they bring fresh spending
BLong-term customers demand lower prices and take up most of a firm's time
CA firm should let five percent of its customers defect to rival companies
DKeeping loyal customers is one of the most profitable things a firm can do
Answer & Solution
Correct answer: D. Keeping loyal customers is one of the most profitable things a firm can do
1. Every quoted sentence stacks up value on the side of the long-term customer: they buy more, cost less time, accept prices, recruit others, and need no acquisition spending.
2. The closing figure drives it home, since cutting defections by five points can double profits in some industries.
3. So the main point is that holding on to loyal customers is enormously profitable.
4. The new-customer option reverses the comparison; the quoted lines say long-standing customers are the valuable ones.
5. The demanding option contradicts the quoted lines, which say these customers are less sensitive to price and take less time.
6. The defection option misreads the five points, which measure a reduction worth achieving, not a loss worth allowing.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.8 Trends in the Business Environment and Competition_
Related questions
Read these lines: "In a perfectly competitive market, firms sell their products at prices Read these lines about a market for snowboard jackets: "The equilibrium price is $80; the Read these lines: "When government takes more money from business and consumers, a phenomeRead these lines about one tool a central bank can use: "An expansionary policy stimulatesRead these lines: "A decline in GDP that lasts for two consecutive quarters (each a three-Read these lines: "If prices go up but income doesn't rise or rises at a slower rate, a giRead these lines: "Full employment doesn't actually mean 100 percent employment. Some peopRead these lines: "The more than 75 million members of the millennial generation were born