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.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!