A finished BUS-332 Topic 1 retention economics comparison example, computing acquisition and retention costs from case figures and showing where each dollar earns more. Searches like "bus 332 topic 1 assignment example", "bus332 topic 1 sample" and "bus-332 topic 1 example" land here.
What a finished BUS-332 Topic 1 retention economics comparison looks like
The finished comparison works in the provider's own numbers, labeled as illustrative. Winning a subscriber costs about 300 once promotions, installation and advertising are counted, and each subscriber contributes a margin of 25 a month, so a new customer only repays the cost of acquiring them after a year. Anyone who leaves before then was a loss. Keeping a wavering subscriber through a service call and a modest credit costs closer to 60. The example sets these against each other and against the provider's churn, showing that acquisition spending partly just replaces customers who walked out. It declines to repeat the popular multiple comparing the two costs, and instead derives the ratio for this business, which is the only version a manager could defend.
How a BUS-332 Topic 1 example is structured
The comparison is organized as two ledgers and a verdict. It begins by defining the customer, the period and what counts as margin, since both sides of the comparison depend on those definitions. The acquisition ledger lists every cost of winning a subscriber, including the ones marketing budgets tend to omit, such as installation and first-month promotions. A payback line then shows how many months of margin a new subscriber must stay to cover that cost. The retention ledger lists what the provider spends to keep a customer who has signaled they may leave. Churn comes next, converted into the number of subscribers the business must win each year merely to stand still. The verdict weighs a dollar spent on each side and notes where acquisition still earns its place.
Every acquisition cost counted
Installation, promotional credits and advertising all belong to the price of a new subscriber, and leaving any out flatters acquisition against retention.
Payback measured in months of margin
Dividing acquisition cost by monthly margin shows how long a newcomer must stay before the business stops losing money on them.
Churn shown as replacement demand
The provider's departure rate is converted into subscribers that must be won each year just to hold the base steady, before any growth.
The ratio derived, not quoted
Instead of repeating a widely circulated multiple, the example computes what acquisition costs relative to retention for this particular business.
Where acquisition still earns a place
A base that never adds customers shrinks over time, so the verdict rebalances spending instead of arguing that acquisition should stop.
Where marks go in BUS-332 Topic 1
Borrowed statistics are the quickest way to lose credit here: a paper asserting that acquisition costs some fixed multiple of retention, with no source and no connection to the case, rests its argument on folklore. Leaving installation or promotional credits out of acquisition cost understates it and tilts the central comparison in acquisition's favor. Treating revenue as though it were margin inflates the value of every customer on both sides of the ledger. A comparison with no payback period misses why early departures are so expensive. Papers arguing for abandoning acquisition entirely overlook that every base loses customers and must replace some. Ignoring churn leaves acquisition spending looking like growth when much of it only refills the base.
Get a BUS-332 Topic 1 example written to your instructions
Send the BUS-332 Topic 1 instructions and the rubric from your classroom, with the company or data your section assigned. We write a custom example to those instructions and that rubric, with acquisition and retention costs built from the case, payback in months, churn converted into replacement demand and the ratio derived instead of quoted, in 24 to 48 hours. The first one is free.
BUS-332 Topic 1 questions, answered
Is keeping a customer always cheaper than finding a new one?
Usually, not always. Keeping one is cheaper in most subscription and repeat-purchase businesses because the acquisition cost has already been paid and the relationship requires less persuasion. It can run the other way where customers are cheap to win and expensive to serve, or where a customer is unprofitable. The example computes the comparison for its own case instead of assuming the answer.
Why does payback period matter in retention economics?
Because a customer who leaves before repaying their acquisition cost was a loss, however pleasant the relationship. In the illustrative case, a subscriber must stay a full year before the provider recovers what it spent winning them. That makes early departures disproportionately expensive and explains why the first months of a relationship deserve more attention than a flat average churn figure suggests.
Should a business stop spending on acquisition?
No. Every customer base loses members to relocation, changing needs and competitors, so some acquisition is needed simply to hold steady. The argument is about balance: many businesses spend most of their budget winning customers and comparatively little keeping them, and the comparison shows where the next dollar would earn more. That usually shifts spending toward retention without eliminating acquisition.