Question

Customer Lifetime Value (CLV) 1. An internet service provider (ISP) charges $19.95 per month. With an average of marketing spending of $6 per year for each customer, it's estimated that each month about 2% of customers leave ISP. Other variable costs are about $1.50 per account per month. The average upfront cost to acquire a customer is $34. What's the CLV of a customer at a discount rate of 5%? I 2. A credit card company has a card member with an annual margin of $300. The typical retention rate for card member is 80%. The applicable interest rate to discount future cash flows of this credit card company is 10%. The average upfront cost to acquire a customer is $58. Therefore, what is the customer lifetime value for this customer?
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Answer 1

* Answer :- Q-1: Ansues charges for service = $19.95 per month Average spending $ 6 per year $0.50 per month Retention Ratio & 98% every month Variable cost = $ 1.50 per month Upfront cost to acquire new customer $ 34 Discount Rate 5%
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