With regard to customer defection, which of the following statements is incorrect?
A)Defection rates are determined by customer loyalty.
B)The longer a company holds on to a customer, the greater is the volume of customer-generated unit sales.
C)Lowering customer defection rates allows a company to achieve a lower cost structure.
D)The longer a company retains a customer the higher the average unit cost of each sale.
E)There is a positive relationship between the length of time that a customer stays with the company and profit per customer.

Question

Quizplus · Accepted Answer

The statement "The longer a company retains a customer the higher the average unit cost of each sale" is incorrect. This is because over time, the cost of serving a customer often decreases as the company becomes more familiar with their needs and can provide more efficient service.

With Regard to Customer Defection, Which of the Following Statements