Assume that Shannon’s decides to move forward with its loyalty/rewards program. Estimates for the cost per customer is $6.38 per month. Average customer margins, before subtracting off the cost of the loyalty/rewards program, are expected to be 34.8. Assuming that Shannon’s wishes to obtain a minimum CLV of $120, what is the required retention rate that must be achieved? Assume that the interest rate is 1% per month. (Note: This problem assumes that you employ some algebra to solve the CLV formula for r.) Round your answer to four decimal places (e.g., .12345 rounds to .1235). Do not express in percent form.

Answer rating: 100% (QA)

To calculate the required retention rate r we can use the fo... View the full answer