A regular customer who often visits target once a week and buys around $65. If the...
A regular customer who often visits target once a week and buys around $65. If the profit margin for target is 15%, what is the value of a loyal customer to target with a retention rate of 75%?
Homework Answers
Given, Retention rate = 75% = 3/4 week
Average value of sale = $65
Number of Transactions = 1
Lifetime value = Average value of sale x Number of Transactions x Retention Time Period
Hence, Lifetime value = 65 x 1 x 3/4 = 48.75
Customer Lifetime Value = Lifetime Value x Profit Margin = 48.75 x 15% = $5.85
The above is the customer lifetime value for a week.
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A regular customer who often visits target once a week and buys
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