1. Suppose customers can be acquired for $200 per customer through your customer acquisition channels. Suppose...
1. Suppose customers can be acquired for $200 per customer through your customer acquisition channels. Suppose these customers each have a customer lifetime value of $700. How many new customers would be necessary to increase customer equity by $1m? Explain your reasoning.
2. Apply the customer lifetime value and/or customer equation equations to a current or future work situation to demonstrate the long-term store of value for a collection of real or hypothetical relationships.
Homework Answers
1.
Profitability of each customer = customer lifetime Value - customer acquisition cost
= 700 - 200
= $ 500
Customer equity is the sum of Total customer profitability accumulated
Number of customers necessary to increase customer equity by $ 1m
= 1000000/500
= 2000 customers
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