Question: A catalogue marketer groups its customers into two segments: premier and regular. There are 1000 customers of each type. The contribution margins of the two
A catalogue marketer groups its customers into two segments: premier and regular. There are 1000 customers of each type. The contribution margins of the two segments are $100 and $50, respectively. The retention rates of premier and regular customers are 60% and 50%, respectively. Each period 30% of premier customers become regular customers and 10% are lost forever. Also, 10% of regular customers become premier customers and 40% are lost forever. What is the CLV of current customer base? Use a discount rate of 10% and a time horizon of 15 years.
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