1.Calculate the customer lifetime value (using the formula) for the following three scenarios:

Acquisition cost = $1,000, retention rate = 60%, annual profit = $500

Acquisition cost = $10,000, retention rate = 75%, annual profit = $2,500

Acquisition cost = $100, retention rate = 50%, annual profit = $100

2.Which scenario generates the most customer lifetime value? Which is the least profitable scenario?

3.What elements appear to be the most significant in the calculation - that is, if you were a marketer facing these scenarios, which elements would you focus upon?

4.This is a simple calculation for customer lifetime value. What other information you think needs to be incorporated?