The marketing and sales budget of Toby Inc.is estimated to be $450 million.It has retained 800,000 customers and has acquired 350,000 new customers.The marketing administration cost of the company is $150 million.If the acquisition cost per customer is $350,calculate the approximate retention cost per customer.

Question

Quizplus · Accepted Answer

The total cost incurred in acquiring new customers is 350,000 x $350 = $122,500,000.
The total marketing and sales budget is $450,000,000 - $150,000,000 = $300,000,000
The total cost of retaining customers is the remaining budget = $300,000,000 - $122,500,000 = $177,500,000
The retention cost per customer is $177,500,000 / 800,000 customers = $222.50 which is approximately equal to $222. Hence, the best answer is B.

The Marketing and Sales Budget of Toby Inc