Executive Summary:
The article talks about the Fraser Office Supplies, which offers Basic Office Supplies (such as clips, rubbers) and continued to expand its product line including Custom Printing ( such as business cards, labels), and also some Technology (such as computer accessories). FOS was based primarily on catalogue sales (established a strong online presence) and focus on serving the needs of small and medium size business. Now, FOS was facing some serious problems, which led the sales stagnant for the past three years no matter what different strategies they had tried. To persuade the profit is the common goals of companies, in order to get to this goal, there are some recommendations as following.
Recommendation
Increase the industry retention rate: particular of the top 25%: The retention rates have a direct impact on long-term customer value. In principle, if increase 5% of customer retention rate from 75% to 80%, improves 1 year of customer retention from 4 years to 5 years, Let¡¦s take it in to calculation, and use 2002 as an example, the average revenue per client in the top 25% is $2430, and the customers in the top 25% is 1500 / 4 = 375, So the total revenue will increase 2430* 375 = 911250, it is about 71% of the total revenue of 2002. This example proves that customer retention can lead to significant increase in profitability. On the other hands, FOS may just focus on improving the retention rate in the particular of the top 25% customers, because it¡¦s very difficult and very expensive to increase the customer retention rate, and most of the total revenue was generated by the top 25% of customers (not only in 2002), therefore, it can only spend 25% of the total expense in retention the top 25% customer, and generate 71% in tot ...