CLV = Profit per year X Number of years as a customer (lifetime) less customer acquisition costs And we can use the churn rate % to tell us how many years our average customer stay by dividing 1/churn rate. In our case that is 1/20% = 5 years = customer lifetime. A supermarket chain ran a social media campaign and they got 2,000 new customers. The TOTAL cost of the campaign was $250,000. These customers visited the supermarket 25 times a year. Each customer spends $100 per visit and the supermarket makes a 4% profit margin on the customer’s spend. The retention rate of the customers is 60%. What is their CLV? Assume that the profit margin is based on the customer’s non-discounted spend, then deduct the discount.
CLV = Profit per year X Number of years as a customer (lifetime) less customer acquisition costs And we can use the churn rate % to tell us how many years our average customer stay by dividing 1/churn rate. In our case that is 1/20% = 5 years = customer lifetime. A supermarket chain ran a social media campaign and they got 2,000 new customers. The TOTAL cost of the campaign was $250,000. These customers visited the supermarket 25 times a year. Each customer spends $100 per visit and the supermarket makes a 4% profit margin on the customer’s spend. The retention rate of the customers is 60%. What is their CLV? Assume that the profit margin is based on the customer’s non-discounted spend, then deduct the discount.
Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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CLV = Profit per year X Number of years as a customer (lifetime) less customer acquisition costs
And we can use the churn rate % to tell us how many years our average customer stay by dividing 1/churn rate. In our case that is 1/20% = 5 years = customer lifetime.
A supermarket chain ran a social media campaign and they got 2,000 new customers. The TOTAL cost of the campaign was $250,000. These customers visited the supermarket 25 times a year. Each customer spends $100 per visit and the supermarket makes a 4% profit margin on the customer’s spend. The retention rate of the customers is 60%. What is their CLV? Assume that the profit margin is based on the customer’s non-discounted spend, then deduct the discount.
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