Calculate the probability of the customer being alive, P (alive) for each month and then calculate...

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Calculate the probability of the customer being alive, P (alive) for each month and then calculate the Net Present Value of GC using the formulac NPV of GC, = P(Alive) itx AMCM₁ " ( 1 + a) " t=1 where, NPV-Net Present Value GCit-estimated expected gross contribution margin of customer i at a given month t AMCMi-average monthly gross contribution margin based on all prior purchases i-customer t is the month for which NPV is being estimated t T is the number of months ahead that are included in the forecast (June, July and August) P (Alive) is the probability that customer I is alive in month t (previously computed) 11 12 11 14 15 17 18 19 20 Customer 7 1 4 53 6 7 H 9 10 Jan ERREGRE RRO 80 100 Feb 墨030只是穿coo是 March 200 ---CER 130 120 145 20 April 30 150 0 150 0 100 0 0 0 0 May RO204E- 0 n 4 4 2 1 2 Step 1-First calculate PAlive) P(Alive) July June 0.48 026 August 33 4 S 63 7 8 9 10 1 1 T 1 0 1 0 Now calculate and analyze the CLV of each customer for the months of June, July and August as of the beginning of June d-decount rate for month 1 (15% on a yearly basis which is 1.25% per month) Hint: The CV of a ontomer is their NPV of GC minus their NPV of Marketing Costs Step 1: Calculate the probability of the ontomer being alive. P (alive) for each month and then calculate the Net Present Value of GC using the formula P (Alive) Denominator 1 0 1 1 1 D D D 1 1 B 1 9 D 1 1 11 1 1 4 1 A O 1 0 1 0 0 0 0 1 D 1 0 1 0 1 1 1 0 Denomi A 3 4 S S Step 3: Calculate CLV of each customer as: CLV-NPV of GC-NPV of MC Step 2 Calculate NPV of Gross Contribution Customer NPV June NPV July NPV August Total NPV S 10.86 S 5.79 $ S 16.65 $ 1 2 3 4 5 56820 7 19 10 sssssssss ssssssss $ S $ $ $ $ $ SS S S sssssssss $ $ SSSSSSSSSS $ CLV Step 3 11.22 Rank 1 2 2 2 2 2 J227 2 2 Calculate the probability of the customer being alive, P (alive) for each month and then calculate the Net Present Value of GC using the formulac NPV of GC, = P(Alive) itx AMCM₁ " ( 1 + a) " t=1 where, NPV-Net Present Value GCit-estimated expected gross contribution margin of customer i at a given month t AMCMi-average monthly gross contribution margin based on all prior purchases i-customer t is the month for which NPV is being estimated t T is the number of months ahead that are included in the forecast (June, July and August) P (Alive) is the probability that customer I is alive in month t (previously computed) 11 12 11 14 15 17 18 19 20 Customer 7 1 4 53 6 7 H 9 10 Jan ERREGRE RRO 80 100 Feb 墨030只是穿coo是 March 200 ---CER 130 120 145 20 April 30 150 0 150 0 100 0 0 0 0 May RO204E- 0 n 4 4 2 1 2 Step 1-First calculate PAlive) P(Alive) July June 0.48 026 August 33 4 S 63 7 8 9 10 1 1 T 1 0 1 0 Now calculate and analyze the CLV of each customer for the months of June, July and August as of the beginning of June d-decount rate for month 1 (15% on a yearly basis which is 1.25% per month) Hint: The CV of a ontomer is their NPV of GC minus their NPV of Marketing Costs Step 1: Calculate the probability of the ontomer being alive. P (alive) for each month and then calculate the Net Present Value of GC using the formula P (Alive) Denominator 1 0 1 1 1 D D D 1 1 B 1 9 D 1 1 11 1 1 4 1 A O 1 0 1 0 0 0 0 1 D 1 0 1 0 1 1 1 0 Denomi A 3 4 S S Step 3: Calculate CLV of each customer as: CLV-NPV of GC-NPV of MC Step 2 Calculate NPV of Gross Contribution Customer NPV June NPV July NPV August Total NPV S 10.86 S 5.79 $ S 16.65 $ 1 2 3 4 5 56820 7 19 10 sssssssss ssssssss $ S $ $ $ $ $ SS S S sssssssss $ $ SSSSSSSSSS $ CLV Step 3 11.22 Rank 1 2 2 2 2 2 J227 2 2

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To calculate the probability of the customer being alive alive for each month you need to have infor... View the full answer