Question
A cable company spends on average $600 to acquire a customer. Over time, 80% of customers remain with the company from one year to the
A cable company spends on average $600 to acquire a customer. Over time, 80% of customers remain with the company from one year to the next. The discount rate is 12%. Costs to serve each customer are: annual maintenance costs - $45; annual record-keeping and billing costs - $30. Revenue is as follows:
| | Price per Month | % of Customers |
| Basic Service | $30 | 50% |
| Premium Service | $50 | 40% |
| Super Premium Service | $80 | 10% |
- What is the annual profit margin for an average customer?
- What is the CLV for an average customer?
- What is the CLV for a Super Premium customer?
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Business Statistics
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
3rd Edition
978-0321944726, 321925831, 9780321944696, 321944720, 321944690, 978-0321925831
