Can you help me to complete quest 2? I don't know how to fill net profit change in LTV TABLE and also I need quest 3 to be solved. Thanks! cheers! Also, I m not 100% sure whether I solved quest 2 correctly.
Quest Complete this original LTV chart (3 marks) 1 TABLE 1 Year 1 # Customers 50,000 Retention Rate 40% Average revenue per customer Total Revenue $5,000,000 Year 2 20000 Year 3 10000 60% 50% $100 $120 $135 $2,400,000 $1,350,000 35% 30% 40% $2,000,000 $2,500,000 $840,000 Variable costs % Variable costs $ Acquisition Costs ( $50) Total Costs $405,000 $ $ $4,500,000 $840,000 $405,000 $500,000 $945,000 1.36 1 Gross Profit Discount Rate Net Present Value Profit Cumulative NPV Profit $1,560,000 1.16 $1,344,828 $1,844,828 $500,000 $500,000 $694,853 $2,539,681 Average LTV per customer $10.00 $36.90 $50.79 25,000 x 42% = 10,500 Quest Calculate the new LTV and the change in Net Profit based on 2 implementing a Referral Program (6 marks) TABLE 2 Year 1 Year 2 Customers retained from previous year 25,000 10,500 Retention Rate 42% 52% Referral Rate (ie - % of customers who referred) 2% 3% Customers referred from previous year 0 500 Total Customers 25,000 11,000 Average Revenue per customer $110 $130 Total Revenue $2,750,000 $1,430,000 Year 3 5460 62% 4% 315 5,775 $140 $808,500 25,000 x 2% = 500 10,500+ 500 = 11,000 Variable costs % Variable costs $ Referral Program Costs Acquisition Costs ( $50) Total Costs 40% $1,100,000 $0 $2,500,000 $3,600,000 35% $500,500 $15,000 $1,000,000 $1,515,500 30% $242,550 $9,450 $500,000 $752.000 $850,000 1 Gross Profit Discount Rate Net Present Value Profit Cumulative NPV Profit Referral Program LTV -$850.000 -$850,000 $34.00 $85,500 1.16 -$73,707 $923,707 $36.95 $56,500 1.36 $41,544 -$882.163 $35.29 Net Profit Change in LTV: TABLE 3 Year 1 Year 2 Year 3 New Average LTV per customer Original average LTV per customer $ Change in Average LTV per customer Quest Should Lipton move ahead with the referral program? Why or why not? (1 3 mark) Q2: Complete Table 2 Using the information provided, calculate the new LTV and the change in Net Profit based on implementing a Referral Program. (6 marks). Assumptions: * 25,000 respondents targeted to receive Referral Card inserts in "What's for Dinner?" All costs and customer numbers for year 1 are included in year 2 totals (Yr. 2 included in Yr. 3 etc.) With the referral program in plave, retention rates and average revenue per customer are assumed to be higher vs. original LTV Variable costs assumed to be the same as original LTV chart Referral Program Costs $40/referred customr ( Yr. 1), $30 / referred customer (yr. 2,3) Think of "Customers retained from previous year" as the "opening inventory" and Total customers as the "closing inventory". So Total customers = Customers retained from previous year + Referred customers. Total customers x retention rate will be the "opening inventory" (ie "customers retained from previous year") for the following year. Q3: Complete Table 3 Should Lipton's go ahead with the referral program (1 mark). Quest Complete this original LTV chart (3 marks) 1 TABLE 1 Year 1 # Customers 50,000 Retention Rate 40% Average revenue per customer Total Revenue $5,000,000 Year 2 20000 Year 3 10000 60% 50% $100 $120 $135 $2,400,000 $1,350,000 35% 30% 40% $2,000,000 $2,500,000 $840,000 Variable costs % Variable costs $ Acquisition Costs ( $50) Total Costs $405,000 $ $ $4,500,000 $840,000 $405,000 $500,000 $945,000 1.36 1 Gross Profit Discount Rate Net Present Value Profit Cumulative NPV Profit $1,560,000 1.16 $1,344,828 $1,844,828 $500,000 $500,000 $694,853 $2,539,681 Average LTV per customer $10.00 $36.90 $50.79 25,000 x 42% = 10,500 Quest Calculate the new LTV and the change in Net Profit based on 2 implementing a Referral Program (6 marks) TABLE 2 Year 1 Year 2 Customers retained from previous year 25,000 10,500 Retention Rate 42% 52% Referral Rate (ie - % of customers who referred) 2% 3% Customers referred from previous year 0 500 Total Customers 25,000 11,000 Average Revenue per customer $110 $130 Total Revenue $2,750,000 $1,430,000 Year 3 5460 62% 4% 315 5,775 $140 $808,500 25,000 x 2% = 500 10,500+ 500 = 11,000 Variable costs % Variable costs $ Referral Program Costs Acquisition Costs ( $50) Total Costs 40% $1,100,000 $0 $2,500,000 $3,600,000 35% $500,500 $15,000 $1,000,000 $1,515,500 30% $242,550 $9,450 $500,000 $752.000 $850,000 1 Gross Profit Discount Rate Net Present Value Profit Cumulative NPV Profit Referral Program LTV -$850.000 -$850,000 $34.00 $85,500 1.16 -$73,707 $923,707 $36.95 $56,500 1.36 $41,544 -$882.163 $35.29 Net Profit Change in LTV: TABLE 3 Year 1 Year 2 Year 3 New Average LTV per customer Original average LTV per customer $ Change in Average LTV per customer Quest Should Lipton move ahead with the referral program? Why or why not? (1 3 mark) Q2: Complete Table 2 Using the information provided, calculate the new LTV and the change in Net Profit based on implementing a Referral Program. (6 marks). Assumptions: * 25,000 respondents targeted to receive Referral Card inserts in "What's for Dinner?" All costs and customer numbers for year 1 are included in year 2 totals (Yr. 2 included in Yr. 3 etc.) With the referral program in plave, retention rates and average revenue per customer are assumed to be higher vs. original LTV Variable costs assumed to be the same as original LTV chart Referral Program Costs $40/referred customr ( Yr. 1), $30 / referred customer (yr. 2,3) Think of "Customers retained from previous year" as the "opening inventory" and Total customers as the "closing inventory". So Total customers = Customers retained from previous year + Referred customers. Total customers x retention rate will be the "opening inventory" (ie "customers retained from previous year") for the following year. Q3: Complete Table 3 Should Lipton's go ahead with the referral program (1 mark)
