E A marketer is considering a new customer segment compared to the average (in orange). Enter the assumptions below into the inputs area. Then answer the questions below. 3 INPUTS: CUSTOMER LIFETIME VALUE OF NEW SEGMENT s Discount rate 5.00% 6 Acquisition cost $ 30.00 7 Retention costs $ 19.00 & Retention rate 92.00% Average customer contribution $ 102.00 10 11 INSTRUCTIONS TO CALCULATE CLV 12 1) Enter discount rate: Period 1. 12) Enter acquisition cost: Period 1. 14 3) Enter retention costs: Period 2, 3, and 4. 154) Enter retention rate: Period 2, 3, and 4. 165) Enter average customer contribution: Period 1, 2, 3, 4. 17 2 3 4 18 ENTER INPUTS HERE 19 Discount rate 20 Acquisition cost 21 Retention costs 1 5.00% $ 20.00 $ $ 15.00 $ 15.00 $ 15.00 Sheet1 C D E 2 3 4 ENTER INPUTS HERE 1 Discount rate 5.00% 20 Acquisition cost $ 20.00 21 Retention costs $ 22 Retention rate 2 Average customer contribution $ 100.00 $ 15.00 $ 90.00% 100.00 $ 15.00 $ 90.00% 100.00 $ 15.00 90.00% 100.00 24 23 OUTPUTS 26 Cumulative retention 100.00% 27 Net contribution $ 80.00 $ 22 Expected average contribution $ 80.00 $ 2 Discount factor 1.05 20 Discount factor per period 1 $ 80.00 $ 90.00% 85.00 $ 76.50 $ 81.00% 85.00 $ 68.85 $ 72.90% 85.00 61.97 1.05 72.86 $ 1.1025 62.45 $ 1.157625 53.53 31 32 CLV $268.83 14 QUESTIONS * What is the change in CLV? 17 How does it compare to the average segment? 32 33 CLV $268.83 34 35 QUESTIONS 36 What is the change in CLV? 37 38 How does it compare to the average segment? 39 40 Is this segment worth pursuing? 41 42 Why? 43 44 45 46