Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Alfred's organic dog food was formulated to provide for the nutritional needs of older pets. The company did not sell through retailers, but shipped directly
Alfred's organic dog food was formulated to provide for the nutritional needs of older pets. The company did not sell through retailers, but shipped directly to consumers. Consumers ordered through the company's web site or called the 1-800 number. An analysis of the company's records showed the patterns for a typical cohort of 50 customers in the table below. The company's contribution margin on this product was 36% of sales after shipping, order processing and other variable non-marketing costs. Each order included a brochure and reorder forms that cost $0.87 per shipment. Because the time between orders averaged 3 months, the company organized their analysis into period of 3 month duration. Almost no customers ordered after two years from their initial order. Alfred has historically used an annual discount rate of 10% to determine CLV. 3 Month Period 0 1 2 3 4 5 6 Customer Orders 50 27 16 12 8 4 2 Avg S/Order $25 $40 $30 $35 $25 $20 $20 CALCULATED VARIABLES discount-0.0241 (2.41%) margin- $8.13 What is the average customer lifetime value of a customer acquired in period 0? 0.00 dollars ($) Submit Answer Exit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started