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differences are not meaningful. Of the 31,634 customers in the sample, 3854 are online
customers and the remaining are offline customers. The ranges of these two types of customers
overlap. The customer profitability minimum for offline and online customers is -$221 and the
maximum is approximately $2000 for both as well. The average profitability is approximately
$113 and standard deviation is approximately 275 for both types. The median for offline
customers is nine and for online customers in twelve. In a 95% confidence interval a two-sample
t-test revealed that the p-value is 0.210. Since this p-value is greater than the significance level
alpha of .05 we cannot reject the null hypothesis. See exhibit two through five.
What is the role of customer demographics in comparing online and offline profitability?
Provide statistical support for your answer.
No demographic plays a role in online and offline profitability. The R, or predictability factor, is
0.057. This is a weak correlation because it is nowhere near +/- one. Only age, income and
tenure have a positive relationship with profit. See exhibit six and seven.
What is your recommendation to the senior management team in terms of Pilgrim Banks
online channel pricing strategy? Should the bank charge fees, offer rebates or do nothing in
regards to pricing for online channel use?
My recommendation is for Pilgrim Bank to conduct more exploration and research into what
makes a more profitable customer. Since we do not have an insight because no relationship exists
between online use and profitability, we cannot leverage it using fees or rebates. Until Pilgrim
Bank finds a relationship between a profitable customer and another factor, there should be no
decision made by the group.
Exhibit 1:
Exhibit 2:
Exhibit 3:
Exhibit 4:
Exhibit 5:
Exhibit 6:
Exhibit 7:
Exhibit 8: