Complete Cable has an 70% retention rate. Each customer costs the company $75 monthly. The company...
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Complete Cable has an 70% retention rate. Each customer costs the company $75 monthly. The company offers three plans with monthly revenues as outlined in the table below. Assume a 12% discount rate in your calculations. Part A (5 points): Calculate the CLV for each customer group at the current retention rate. Part B (5 points): Calculate the CLV for each customer group if the retention rate increases to 75%. Complete Cable Plans: Binge Watcher TV Lover Basic Package Binge Watcher TV Lover Basic Monthly Revenue $ $ $ Part C (5 points): Assuming the company has 500,000 customers, what is the maximum it should spend to increase its retention rate from 70% to 75%? Step 1: Calculate the weighted average of CLV's @ 70% retention Weighted Average CLV of all Customers 200.00 150.00 100.00 Package Binge TV Lover Basic Weighted Average CLV of all Customers Hint: For this problem, you'll need to calculate the weighted average of CLVS across all customer groups (e.g, Binge Watchers, TV Lovers) using the percent of Complete Cable's total customers in each group (mix). The mix is shown below. Total Customers Step 2: Calculate the weighted average of CLV's @ 75% retention 500,000 500,000 500,000 Total Customers 500000 500000 500000 Mix Mix 35% 30% 35% 100% Monthly Cost $ $ $ 35% 30% 35% 75.00 75.00 75.00 100% CLV @ 70% r (from Part A) CLV @ 75% r (from Part B) Weighted Lifetime Value of All Customers Weighted Lifetime Value of All Customers So, what is the maximum Complete Cable should spend to increase its retention rate from 70% to 75%? Answers: Cable Plan: Binge Watcher TV Lover Basic Hint: Sum Part A: CLV @ 70% r Part B: CLV @75% r Use this formula for these cells: Total Customers x Mix x CLV Answer: Use this formula for these cells: Total Customers x Mix x CLV Complete Cable has an 70% retention rate. Each customer costs the company $75 monthly. The company offers three plans with monthly revenues as outlined in the table below. Assume a 12% discount rate in your calculations. Part A (5 points): Calculate the CLV for each customer group at the current retention rate. Part B (5 points): Calculate the CLV for each customer group if the retention rate increases to 75%. Complete Cable Plans: Binge Watcher TV Lover Basic Package Binge Watcher TV Lover Basic Monthly Revenue $ $ $ Part C (5 points): Assuming the company has 500,000 customers, what is the maximum it should spend to increase its retention rate from 70% to 75%? Step 1: Calculate the weighted average of CLV's @ 70% retention Weighted Average CLV of all Customers 200.00 150.00 100.00 Package Binge TV Lover Basic Weighted Average CLV of all Customers Hint: For this problem, you'll need to calculate the weighted average of CLVS across all customer groups (e.g, Binge Watchers, TV Lovers) using the percent of Complete Cable's total customers in each group (mix). The mix is shown below. Total Customers Step 2: Calculate the weighted average of CLV's @ 75% retention 500,000 500,000 500,000 Total Customers 500000 500000 500000 Mix Mix 35% 30% 35% 100% Monthly Cost $ $ $ 35% 30% 35% 75.00 75.00 75.00 100% CLV @ 70% r (from Part A) CLV @ 75% r (from Part B) Weighted Lifetime Value of All Customers Weighted Lifetime Value of All Customers So, what is the maximum Complete Cable should spend to increase its retention rate from 70% to 75%? Answers: Cable Plan: Binge Watcher TV Lover Basic Hint: Sum Part A: CLV @ 70% r Part B: CLV @75% r Use this formula for these cells: Total Customers x Mix x CLV Answer: Use this formula for these cells: Total Customers x Mix x CLV
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Answer rating: 100% (QA)
CLV denotes the customer lifetime value which means the margin of profit that the company can achieve from one customer for a given period of time Time value of money is also incorporated in it by app... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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