Training increases revenue The revenue could come from incre

Training increases revenue. The revenue could come from increased quality of the customer experience due to the impact of training. The numbers are percentages of customers in each satisfaction category six months before and six months after employees received their training. A key change is a reduction in the \"Very dissatisfied - will never return\" category of customers, which fell from 15 to 5 percent. What will this 10-percent change mean to the bottom line?

Before Training: (15%) Very Dissatisfied - will never return, (15%) OK, but would return, (70%) Satisfied - would return

After Training: (5%) Very Dissatisfied - will never return, (15%) OK, but would return, (80%) Satisfied - would return

Assume that the average revenue generated per month by a customer is $500.00. Also assume that you have 500 customers. What is the increased revenue due to the training for the past six months? What would be the revenue generated if you had 1,000 customers?

Solution

Bottom line means the net profit. The 10% reduction in the category of \"very dissatisfied\" customers means that these customers have now experienced a positive change in terms of the quality of services that is being provided to them. As a result, they are more likely to return as a customer (they will be called repeat customers). This will translate into higher topline (revenues) meaning increased bottomline. The quantum of increase will not be much as some costs have gone into training and this will erode profitability to some extent.

The number of customers who will come back again = 15%-5% = 10% of 500 = 50

revenue generated by these 50 customers in a month = 50*$500 = 25,000

revenue generated by these customers in 6 months = $25,000*6 = $150,000

If i had 1,000 customers: number of customers who will come back again = 15%-5% = 10% of 1000 = 100

revenue generated by these 50 customers in a month = 100*500 = $50,000

revenue generated by these customers in 6 months = $50,000*6 = $300,000