- Assume probability of losing a customer is 0.2 each year (retention rate =80% ) - Assume value of money decreases with time (discounting included),.. first year contribution comes at end of, the year CLV =$227+$165+$120+$87+$64=$664 - CLV net of Acquisition Costs =$664$400=$264 - Perform the CLV calculations with a lower retention rate of 0.5 (vs 0.8 in the example) and a higher discount rate of 0.2 (vs 0.1 in the example) - How significant is the combined effect of lower retention and higher discount rate