Michelle Smith is the director of marketing for M&J Jewelry, a direct-mail jewelry business that sells high-end costume jewelry via monthly catalogs. She wants to better understand the lifetime value of the customers. She asks her accounting department for some data to support her CLV analysis and is given the following information:

• The average catalog customer spends $250 per purchase.
• The contribution margin (price minus variable costs) on a sale is 40%.
• The average customer buys 4 times per year.
• The average annual cost of mailing the catalogs is $9.60 per prospect per year. The response rate for the catalog is only 2%, thus it costs about $480 to acquire a customer via catalog.
• The retention rate is 65% year over year.
• Discount rate is 10%.

• What is the discounted lifetime margin of her customer?
• What is the customer lifetime value of her customer?
• What is the customer lifetime return on investment?