Question

A low _____ is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one.

a. subscription fee
b. inventory size
c. churn rate
d. switching cost
e. opportunity cost

Answer 1

A low churn rate is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one. Option C is correct.

Step-by-step explanation:

A low churn rate is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one. When customers continuously engage with a business and remain loyal, it reduces the need for costly efforts to acquire new customers. Churn rate refers to the percentage of customers who stop using a company's product or service over a certain period.

A lower churn rate means higher customer retention, which translates to sustained revenue streams and reduced expenses associated with marketing, sales, and customer acquisition. By investing in strategies to enhance customer satisfaction, addressing their needs, and providing value, businesses can minimize churn rates, fostering long-term relationships and, consequently, greater profitability.

The correct answer is: C. Churn rate