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Q4: Assume that Shannons decides to move forward with its loyalty/rewards program. Estimates for the cost per customer is $5.67 per month. Average customer margins,
Q4: Assume that Shannons decides to move forward with its loyalty/rewards program. Estimates for the cost per customer is $5.67 per month. Average customer margins, before subtracting off the cost of the loyalty/rewards program, are expected to be 33.67. Assuming that Shannons wishes to obtain a minimum CLV of $120, what is the required retention rate that must be achieved? Assume that the interest rate is 1% per month. (Note: This problem assumes that you employ some algebra to solve the CLV formula for r.) Round your answer to four decimal places (e.g., .12345 rounds to .1235). Do not express in percent form.
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