A cable company spends on average $600 to acquire a customer. Over time, 80% of customers remain
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Question:
A cable company spends on average $600 to acquire a customer. Over time, 80% of customers remain with the company from one year to the next. The discount rate is 12%. Costs to serve each customer are: annual maintenance costs - $45; annual record-keeping and billing costs - $30. Revenue is as follows:
| Price per Month | % of Customers |
Basic Service | $30 | 50% |
Premium Service | $50 | 40% |
Super Premium Service | $80 | 10% |
- What is the annual profit margin for an average customer?
- What is the CLV for an average customer?
- What is the CLV for a Super Premium customer?
Related Book For
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
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