Average customer generates annual margin

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Reference no: EM133649979

Question

Imagine our average customer generates an annual margin for us of $50 and has an annual retention rate of 40%. If we use a discount rate of 10%, what is the CLV of a customer (ignoring CAC)? Would we be better off investing in a program that (a) doubles the margin or (b) in an equally-costly one that leaves the margin unchanged but doubles the retention rate? Justify your answer.

Reference no: EM133649979

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