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Customer Lifetime Value Calculation This is an individual assignment. Do your own work and show your calculations. Use an Excel spreadsheet in your solution.
Customer Lifetime Value Calculation This is an individual assignment. Do your own work and show your calculations. Use an Excel spreadsheet in your solution. Be sure to title your rows and columns and highlight your final answer. Read the scenario below and calculate: 1. Jack's 5-year Customer Lifetime Value. 2. Jack's 3-year Customer Lifetime Value. Scenario Jack is a regular customer of Tucson Hardware. He owns a ranch and frequently comes in for supplies. Jack has been a loyal customer of the hardware store for 5 years and has a Tucson Hardware credit card he uses regularly. Tucson Hardware spent $865 in marketing (mailers & advertising) to attract Jack as a customer. It also cost Tucson Hardware $585 to review Jack's application for credit and set his account up on their CRM and billing systems. The store realizes about $1,100 every month in profit on the purchases Jack makes. Jack pays the store $240 each year in credit card fees and also pays an average $375 per year in interest on his card balances. It costs the Hardware Store an average of $135 per month to maintain Jack's account (sending his statements and processing his payments). Because Jack is a valued customer the store delivers some of Jack's orders for free. This special service costs the store about $150 per month to provide. Tucson Hardware maintains a customer referral program and the store pays customers like Jack $100 for each new customer they refer to the store. Jack referred one new customer in the each of the third, fourth, and fifth years of his time with the store and was paid for each referral accordingly. The value of referrals to the Hardware Store is $750 each.
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