What is the customer lifetime value

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Reference no: EM133343000

First Scenario

CLV (Customer Lifetime Value): Please provide calculation with explanation for each scenario

ABC Broadband Ltd charges Rs.550 per month to its Subscribers for its basic plan. It's margin per customer is 70%. It spends Rs 100 per customer per month as Customer Retention Cost and retains a customer for an average of 5 Year. It spends Rs 1500 to acquire a customer

Question:

What is the CLV (Customer Lifetime Value) of ABC Broadband customers?

Second Scenario

Recently ABC Broadband Ltd has tied up BCD TV to offer, ABC broadband services to BCD TV subscriber. Now ABC broadband can acquire a customer at Rs 1000.

What is the new CLV (Customer Lifetime Value) for ABC Broadband Ltd now?

Third Scenario

If ABC Broadband Ltd starts spending Rs 200 per month as customer retention cost, the average lifetime of a customer with the company shall increase to 6 years. Is this move profitable? Please provide calculation with explanation

Fourth Scenario

If ABC Broadband offers 10GB more data in its services. It will improve its customers lifetime to 6.5 years. But its margin will reduce to 65%. Rest all remains same. Is this more profitable? Please provide calculation with explanation

Fifth Scenario

If ABC Broadband increase its monthly subscription cost to Rs 600, customer life will reduce to 4.5 years. Rest all remains same. Is this move profitable? Please provide calculation with explanation

Reference no: EM133343000

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