Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $23,000 and has a margin of 10%. Based on historical averages, 77% of people buying a new vehicle at Eastern will return for service 9 times over the next 5 years. Though it varies considerably, Eastern generates approximately $86 in margin on each service visit after accounting for parts and direct labor costs.

What would be the value of a service loyalty program that increased the average number of visits by 2 (over 5 years) and increased the probability that a new vehicle purchaser would return for service by 5 percentage points (e.g. from 75% to 80%) on a per customer basis?

tclv = $2,896 CLV = $596 service = $774 margin = $2,300