As software manufacturers and consulting organizations diffuse best practices, and the relevant CRM software becomes widely available and economical to use, all competitors will be equally equipped. However, when compared to rivals, some firms will be rewarded by customers with higher rates of customer loyalty and lower rates of defection while others will continue to stumble. In the end, to excel at customer relationship management, a firm requires a customer-relating capability. Describe the central elements of a customer-relating capability and how it can provide a firm with a strong advantage over competitors.

Engberg company installs lawn sod in home yards. the company’s most recent monthly contribution format income statement follows: amount percent of sales sales $ 80,000 100% variable expenses 32,000 40% contribution margin 48,000 60% fixed expenses 38,000 net operating income $ 10,000 required: 1. compute the company’s degree of operating leverage. (round your answer to 1 decimal place.) 2. using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales. (do not round intermediate calculations.) 3. construct a new contribution format income statement for the company assuming a 5% increase in sales.