Question
Clear Vision Entertainment, Inc. is a digital satellite television provider that charges $35 per month for service. The company plans to increase marketing expenditures aimed
Clear Vision Entertainment, Inc. is a digital satellite television provider that charges $35 per month for service. The company plans to increase marketing expenditures aimed at customer retention next year, but wants to determine CLV before making this decision. Variable Costs before marketing are $5 per account per month. Per year, the company spends $12 per account in retention costs spread equally across the year. Clear Vision's annual attrition rate is 20% with a monthly discount rate of 1%.
a) What is the monthly contribution margin ($) per customer account (not including retention costs)?
b) What are the monthly marketing retention costs per customer account?
c) What is the monthly retention rate?
d) What is Clear Vision's CLV per new customer? Use month as the time horizon.
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