What is the clv of customer over five-year period

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Reference no: EM132265717

a. The average customer spends $250 per purchase.

b. The gross margin associated with these sales is 40%, therefore the average profit from each customer purchase is $100.

c. The average customer buys from the catalog 4 times per year.

d. The average cost of mailing the catalogs is $9.60 per customer per year and if you divide that by the response rate of 2% you get $480 to acquire a customer.

e. Mary loses just over one-third of her customers each year, so her average retention rate is 65%.

f. The discount rate for the time value of money is 10%.

Based on the information above, what is the CLV of a customer over a five-year period? Enter your calculations below:

2. Approximately how much money do you think Mary could justify spending on marketing incentives for her customers? Please explain your answer – there is not one absolute answer to this part.

Reference no: EM132265717

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