Question

b. AP, a national apparel retailer, Plans to work with a third-party developer to launch their mobile ers check their wish list and previous purchases on their phone tore. It also sends targeted promotion notifications to customers. development fee and $20 million marketing costs. However, AP beie effort will lower the customer churn rate from 20% t (1) Fill in the CLV table below. (5 points) (2) Calculate the ROl of the App. (2 points) o 16% Without the App Year 4 400 Year 5 400 Profits per customer No. customers Chur rate Expected profits Year 1 400 1,000,000 20% Year 2 400 800,000 20% 400 640,000 20% 20% 20% 00.000,000 320.000,000 256,000,000 10% 10% 4 10% 10% Discount rate Discount years 10% 2 of expected profits 363,636,364 264.462,810 192,336,589 363,636,364 628,099,174 820,435,763 Cumulative LTV Year 40 With the App Year 4 400 Profits per customer No. customers Chur rate Year 2 400 840,000 16% 400,000,000 336,000,000 282,240,000 Year 1 400 1,000,000 16% Year 3 400 705,600 16% 16% Expected profits iscount rate iscount years 10% 4 10% 10% 2 10% esent value of expected profits 363,636,364 277,685,950 212,051,089 363,636,364 641,322,314 853,373,403 ulativeITV