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Chick-fil-A restaurants want to find out the lifetime value of their satisfied and highly satisfied consumers....

Chick-fil-A restaurants want to find out the lifetime value of their satisfied and highly satisfied consumers. A satisfied consumer visits Chick-fil-A 3 times a month and spends $9 each time. On average this type of consumer purchases products from Chick-fil-A for 4 years. A highly satisfied consumer visits Chick-fil-A 5 times a month and spends $12 during each visit. On average a highly satisfied consumer purchases products from Chick-fil-A for 8 years.

Calculate the lifetime value of (i) a satisfied consumer; and (ii) a highly satisfied consumer (show your work step by step).

What is the implication of this lifetime value calculation?

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Answer #1

(i) A Satisfied Customer:-

Visits Chick-fil-A 3 times/month i.e 36 times/year and spends 9$/visit

Purchases product for a period of 4 years

Then total Visits in 4 years= 144 times

Revenue earned by Chick-fil-A Restaurant from satisfied customer= (Spend/visit ) * Total visits

Total revenue Earned by Restaurant is = $9*144= 1296$

(ii.) Highly Satisfied:-

Visits Chick-fil-A 5 times/month i.e 60 times/year and spends 12$/visit

Then total Visits in 8 years= 480 visits (60*8)

Total revenue Earned by Restaurant is= 480*12$ =5760$

Highly satisfied customer gives 23 times return over long run

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