Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

After reading SMM Chapter 8, 'Creating Valuable Customers', calculate the CLV for the customer in segments A, B, and C, and state which customer will

After reading SMM Chapter 8, 'Creating Valuable Customers', calculate the CLV for the customer in segments A, B, and C, and state which customer will have a higher lifetime value. Assume identical customer acquisition costs across all segments. Show your calculations as to how you arrived at your answer. Customer in Segment A Customer in Segment B Customer in Segment C Stays active in a market for N=3 years Gross margin $17,000 in year 1 $10,000 in years 2-3 Retention rate = 80 % Firm discount rate = 10%. Stays active in a market for N=3 years Gross margin $8,000 in years 1-3 Retention rate = 80 % Firm discount rate = 10%. Stays active in a market for N=3 years Gross margin $17,000 in year 1 $10,000 in years 2-3 Retention rate = 90 % Firm discount rate = 10%

Step by Step Solution

3.33 Rating (156 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the Customer Lifetime Value CLV for each customer segment we need to use the formula CL... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost management a strategic approach

Authors: Edward J. Blocher, David E. Stout, Gary Cokins

5th edition

73526940, 978-0073526942

More Books

Students also viewed these Accounting questions

Question

mple 10. Determine d dx S 0 t dt.

Answered: 1 week ago