Question
Assume that Shannons decides to move forward with its loyalty/rewards program. Estimates for the cost per customer is $5.15 per month. Average customer margins, before
Assume that Shannons decides to move forward with its loyalty/rewards program. Estimates for the cost per customer is $5.15 per month. Average customer margins, before subtracting off the cost of the loyalty/rewards program, are expected to be 34.72. Assuming that Shannons wishes to obtain a minimum CLV of $120, what is the required retention rate that must be achieved? Assume that the interest rate is 1% per month. (Note: This problem assumes that you employ some algebra to solve the CLV formula for r.) Express your answer to four decimal places e.g. .1234. Do not express in percent form.
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