Question: FitPro + operates on a subscription - based model, charging customers a monthly fee. Below are key financial details: Average revenue per customer per month:

FitPro+ operates on a subscription-based model, charging customers a monthly fee. Below are key financial details:
Average revenue per customer per month: $30
Profit margin: 60%
Retention rate: 75% per year
Discount rate: 10% per year
FitPro+ is considering a new social media advertising campaign. The campaign is expected to acquire 5,000 new customers, with a total cost of $400,000.
1. Compute CLV: Using the formula, calculate the CLV of a single customer for FitPro+. Show your calculations.
2. Interpretation: What does this CLV tell you about the long-term value of each customer?
3. Based on your findings, should FitPro+ proceed with the campaign? Justify your answer.
4. What are some potential risks or limitations of using CLV as the sole decision-making metric for this investment?
5. What other factors (besides CLV) might influence the companys decision to run this campaign?

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