Question

After returning home, you were interested in finding out your
customer lifetime value so that you could develop promotional
campaigns to improve your CLV. In order to calculate the CLV
metric, a speaker at the marketing conference suggested that you
use data from your company's books related to four variables. The
first variable is average value of sales per year. Your books
showed that on average, the average value of sales per year was
$750. The second variable is average customer acquisition cost. It
includes promotion expenses , sales expenses , and your costs of
attracting new customers during the first year, and it was found to
be $ 400. The third variable , average customer retention rate,
consists of the percentage of customers that will most probably buy
from your store next year , and it was found to be 70 percent . The
fourth variable , customertretention cost , is the cost of keeping
customers loyal to your business , and it was found to be $ 100 .
Now that you have all the figures that you need , you take your
notes out of your briefcase to check the formula that you learned
at the marketing conference . The version of CLV they presented at
the conference was : Customer lifetime value =[1/(1-A) Average
customer retention rate )] X (Average value of sales per year ) - (
Average customer acquisition cos t + Ave Average customer retention
cost ). Using the worksheet below , you will need to input the data
and create the formula in the required cell . Replace the variables
in the formula ith the annropriate cell .

Answer #1

Details derived from Records | |

Average value of sales per year | 750 |

Average customer acquisition cost | 400 |

Average customer retention rate | 70% |

Customer retention cost | 100 |

Customer Lifetime Value | 833.33 |

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