Discusses the value of a long-term bank customers

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The chapter discusses the value of a long-term bank customers. There is an equation that highlights how valuable a customer can be -- It is called the Lifetime Value Equation.

For the first homework question -- Find how valuable you are to a business that you spend money at on a regular basis. Here is the equation:

(Average Value of a Sale) X (Number of Repeat Transactions per year) X (Retention Time in Years for the Customer)

An easy example would be the lifetime value of a gym member who spends $100 every month on gym dues for 15 years. The value of that customer would be:

$100 X 12 months X 15 years = $18,000 in total revenue.

Reference no: EM131532594

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