1. Calculate the customer lifetime value if Local Joe's increases its retention rate to 70 percent. To do this, use the equation above and change 0.6 to 0.7.

2. If Local Joe's charged higher prices, it could possibly earn a higher average profit margin per customer. Calculate customer lifetime value if average profit margin per customer rose to $300 per year (note, assume the 60 percent retention rate)."

3. Describe two marketing tactics that Local Joe's could use to increase customer lifetime value. Tie your answers to how each might change the numbers in the customer lifetime value equation.