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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%
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Step: 1
To calculate the Customer Lifetime Value CLV for each customer segment we need to use the formula CL...Get Instant Access to Expert-Tailored Solutions
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Step: 2
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