Reference no: EM133395422

Assignment:

Using his TightWad(R) database, Al's MileageMiser has developed a new GPS based service to certify drivers for insurance discounts. He tracks their speeds, locations, and braking activity and delivers reports to insurance companies. January 1, 2009 he had 5,800 paying customers. Of that group, a year later, 4,400 were still customers. He spent $12,300 on programs designed to keep current customers happy and $39,900 on marketing to acquire new customers. His total number of customers on January 1, 2010 was 7,200. His revenue per customer is $31 per year and variable costs before marketing per customer are $10 per year.

• How many new customers did Al acquire in 2009?
• What is Al's annual churn rate?
• What is Al's annual retention rate?
• Assuming Al acquires new customers and loses existing customers at a steady rate throughout the year, what was the average retention spending per customer in 2009?
• What is the CLV for each of Al's current customers (assuming an annual discount rate of 10%)?
• What is Al's CLV for newly acquired customers (assuming the same annual discount rate)?