The behavior of individual adopters of the card will vary in how much they spend, whether they pay

all of their cha

whether they churn (i.e., whether they renew their card annually or not). As noted on the top of page 3 in the case
were transactors, revolvers, and dormants. Assuming the following for each type of customer, how can the Chase Sa
product and brand to attract the right customers? Has it done so successfully with the Chase Sapphire Reserv
Transactors/Revolvers:
 Both spend $16,000 per year
 Credit balance carried: $0 for transactors, 50% of annual spend for revolvers %
 Renew the card at $450 annual fee
 Interest rate average: 21
Dormants:
 Spend only enough to earn the sign-on bonus
Credit balance carried: $0
 Do not renew card at $450 annual fee
r they pay all of their charges in full each month, and
top of page 3 in the case, three customer archetypes
mer, how can the Chase Sapphire team best design its
he Chase Sapphire Reserve? Why or why not?
Year 1 Transacters Revolvers
Assumptions
Annual spend Asst. Q 16000 16000
% of balance on revolve Asst. Q 0 0.5
Interchange fee on spend p13 1.50% 1.50%
Intrest rate on Revolve Balance p18 21% 21%

Customer revenues
Annaul Card fee 450 450
Interchange fee revenue on spend spend X interchange fee 240 240
Interest Revenue on unpaid balance spend X A4 X A6 0 1680

Acquisition expenses
Card acquisition expense p2 375 375
Bonus Point Expence (@100K) p8 1500 1500

Margin -1185 495

Churners

4000
0
1.50%
0%

450
60
0

375
1500

-1365