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30 Tuscan Lifestyles LTV 31 Initial Order >$50 32 33 REVENUES 34 Number of Initial Customers 35 Number Ordering Customers 36 Response Rate 37

30 Tuscan Lifestyles LTV 31 Initial Order >$50 32 33 REVENUES 34 Number of Initial Customers 35 Number  1. What is the LTV over five years for customers who initially spend less than $50? 2. What is the LTV over

30 Tuscan Lifestyles LTV 31 Initial Order >$50 32 33 REVENUES 34 Number of Initial Customers 35 Number Ordering Customers 36 Response Rate 37 Retention Rate 38 Number of Orders 39 Average Order Size 40 Revenues 41 42 COSTS 43 COGS (rough %) 44 COGS ($) 45 Acquisition Costs 46 Maintenance Mailing Costs 47 TOTAL COSTS 48 49 GROSS PROFIT 50 Gross Profit 51 Discount rate applied NPV 52 53 Cumulative NPV 54 55 LIFETIME VALUE (First purchase) Year 1 3296 3296 2.30% 1 3296 $95.55 58% (5 years ago) Year 2 3296 3296 727 608 1 3416 2383 1185 952 792 93.02 84.02 77.75 70.61 78.26 $314,932.80 317756.3 200219.7 92133.75 67220.72 61981.92 $0 1 3296 2825 1 Year 3 1.06 3296 1633 Year 4 1 58% 58% 58% 58% $182,661.02 184298.7 116127.4 53437.58 38988.02 $0 $0 $0 $0 Year 5 3296 826 1 Year 6 58% 35949.51 $0 1. What is the LTV over five years for customers who initially spend less than $50? 2. What is the LTV over five years for customers who initially spend $50 or more? 3. Based on your findings, which group of customers has higher LTV? 4. Since when has the higher LTV group of customers become profitable? 5. Should you keep sending catalogs to the lower LTV group of customers? Why or why not? 6. Hand in your CLV chart for each group.

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