Question
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
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 $24,400 and has a margin of 10%. Based on historical averages,70% of people buying a new vehicle at Eastern will return for service 9 times over the next 5years. Though it varies considerably, Eastern generates approximately $132 in margin on each service visit after accounting for parts and direct labor costs.
What is the 5 year value of the service component of a customer who returns to Eastern Motors for servicing their vehicle?
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