Which of the following statements is typically correct concerning the break-even probability of collection for repeat sale customers?
A) Break-even probability is higher than for single sale customers.
B) Break-even probability is lower than for single sale customers.
C) The break-even probability does not change between single sale and repeat sale customers.
D) Sales should never be refused for customers offering the potential of repeat sales.

Question

Quizplus · Accepted Answer

The break-even probability of collection for repeat sale customers is typically lower than for single sale customers as the cost of acquiring a new customer is generally higher than the cost of retaining an existing customer. Therefore, repeat sale customers are more valuable to the company, and it is more cost-effective to extend them credit. However, this does not mean that sales should never be refused for potential repeat customers. Companies should always conduct credit checks and evaluate the risk before extending credit to any customer, regardless of their potential for repeat sales.

Which of the Following Statements Is Typically Correct Concerning the Break-Even