Customer Lifetime Value Instructions for Students (1)

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Seneca College *

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MKM915

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Marketing

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Feb 20, 2024

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Digital Marketing Analysis Challenge Assignment Instructions: Customer Lifetime Value Customer Lifetime Value This assignment gives students experience with marketing metrics and figuring customer lifetime value. This instructions document supports the information from Chapter 4: Measurement Model > Student Resources in your Digital Marketing Analytics: Strategic Decision-making eTextbook from Stukent. Objective(s)  Calculate customer lifetime value (CLV)  Calculate cost per customer acquisition (CPA)  Optimize the marketing mix based on CLV and CPA Instructions Use the data from the Customer Lifetime Value Student Guide to answer these questions 1. Calculate the CLV for Netflix. CLV = (Average profits per customer per period) (Retention Rate)/ 1 + (Discount Rate) – (Retention Rate) CLV = (155.88$ - 99$)* 0.6 / 1 + (0.1) – (0.6) = 68.256$ 2. Calculate the CPA of all elements in Netflix’ marketing mix: (Round CPA to the nearest whole dollar) a) Pay-per-Click (PPC) = $60m / 500k = $120 b) Social network ads = $175m / 2.3m = $76 c) Content creation = $300m / 2.8m = $107 d) Email marketing = $50m / 300k = $167 e) Public relations (PR) and events = $75m / 200k = $375 3. Optimize the marketing mix for number of customer acquisitions. Considering the calculated data from prompts 1 and 2, make a recommendation for a marketing mix. Allocate your budget to optimize the spending among marketing channels. Use these mandatory requirements :  Total budget of $660 million  Must use all five (5) elements of the marketing mix  No one can have >$300 million in budget, and the minimum budget for one is $3 million Medium Budget Allocation # of Acquisitions PPC $54,000,000 450,000 Social Network Ads $300,000,000 3,947,368 Content Creation $300,000,000 2,803,738 Email Marketing $3,000,000 17,964 PR & Events $3,000,000 8,000 1

Digital Marketing Analysis Challenge Assignment Instructions: Customer Lifetime Value TOTAL $660.000.000 7,227,070 Reminders…  Round CPA to the nearest whole dollar (i.e. $12.34 rounds to $12.00)  Round # of acquisitions to the nearest whole number (i.e. 123.45 is 123, or 34.56 is 35) Assignment Format  Use these instructions/this document as a worksheet to calculate your answers  When you’re done, enter them into the ”test” in Blackboard to be marked by the faculty 2

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