Compute lifetime value per customer

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Questions

1. Acme Auto Parts has a customer margin of $634 per customer. Acme retains 51 percent of its customers. Acme's discount rate is 10 percent. Suppose Acme increases retention to 68 percent. Compute lifetime value under BOTH sets of numbers, then answer the following - for Acme, a _____-percent increase in retention, led to a ____-percent increase in customer-lifetime value.

75; 63

30; 19

56; 94

33; 40

2. Acme Auto Parts has a customer margin of $554 per customer. Acme retains 29 percent of its customers. Acme's discount rate is 17 percent. Suppose Acme's discount rate changes to 7 percent. Compute lifetime value under BOTH sets of numbers, then answer the following - for Acme, a _____-percent change in the discount rate, led to a ____-percent change in customer-lifetime value.

+80%; -8%

-59%; +13%

+21%; -3%

-10%; +2%

3. Acme Auto Parts has a customer margin of $738 per customer. Acme retains 25 percent of its customers. Acme's customer activity grows at 4 percent per year. Applying a discount rate of 19 percent, please compute lifetime value per customer.

$1039.34

$820.00

$792.59

$1177.55

Reference no: EM133378634

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