Scenario

C1 plans to grow its credit-card business by partnering with merchant RentAHome.com on a limited-time offer: 30% off when customers pay with a C1 card. The discount is fully funded by C1.

To make the problem self-contained, assume:

• "Average spend $500" refers to the average RentAHome transaction amount per redeemer during the campaign.
• The 30% discount is delivered as a statement credit on completed, non-refunded transactions.
• New-customer annual revenue ($550) is an average, risk-adjusted figure for the first year.

Questions

1. List concrete ways a bank can structure joint campaigns with external merchants to acquire new cardholders.
2. For a 30%-off RentAHome.com campaign, what business factors must C1 evaluate before launching?
3. Which spend-related metrics will you monitor to assess incremental profitability?
4. Using these inputs — 2M current customers, 5% already spend at RentAHome, average spend $500, new-customer annual revenue$ 550, 30% discount fully funded by C1 — how many new customers are needed to break even? Ignore incremental revenue from current customers.
5. Does the break-even estimate from Q4 seem achievable? Explain your reasoning and include reasonable funnel/benchmark assumptions.
6. Identify key risks to the break-even calculation and propose mitigation actions.
7. If after launch current spenders increase spend by 20% and new spenders double their spend, recalculate the break-even number of new customers.
8. Given all analyses, would you run the campaign? Provide a recommendation and rationale.
9. Provide an executive-level summary of your findings and next steps.