Instructions: List your variables, write out the basic formulas, then calculate in the next step. Please fill in your answers below each question part in the document $($in black font$).$ The assignment is worth $90$ points. See brackets for point values. Please submit one copy per team. I encourage you all to try the questions and compare answers. That way, you will be checking each other to make sure they are correct. If you want to do it in Excel, please label all your numbers, and show your work with enough steps, so that it is easy to follow. Please type out the formulas. Note: If you use Excel, please use the formula functions to do the calculations. Otherwise, just do them in this file using the equation writer $($on the Insert menu bar$)$ and your calculator, as I have shown you in class.

WeBush is a landscaping service that has clients in three segments: $80$ small residential, $30$ large residential, and $15$ businesses. WeBush charges each segment an average monthly rate of $$120,$$$400,$ and $$1000,$ respectively. The costs to serve each segment on average are: $$50,$$$250,$ and $$380,$ respectively. The retention rates for the segments are $90\%,70\%,$ and $65\%$ respectively. Assuming an annual discount rate of $5\%,$ calculate the following:

a$.$ CLV for each segment. $[6]$

b$.$ Suppose the company decides that it would like to invest $$20,000$ next year on loyalty programs to increase the retention rate. How much would the retention rate need to increase to for each segment if the whole sum were spent in that segment? $[6]$

Q

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formulas. Note: If you use Excel, please use the formula functions to do the calculations. Otherwise, just do them in this file using the equation writer $($on the Insert menu bar$)$ and your calculator, as I have shown you in class.

WeBush is a landscaping service that has clients in three segments: $80$ small residential, $30$ large residential, and $15$ businesses. WeBush charges each segment an average monthly rate of $$120,$$$400,$ and $$1000,$ respectively. The costs to serve each segment on average are: $$50,$$$250,$ and $$380,$ respectively. The retention rates for the segments are $90\%,70\%,$ and $65\%$ respectively. Assuming an annual discount rate of $5\%,$ calculate the following:

a$.$ CLV for each segment. $6$

b$.$ Suppose the company decides that it would like to invest $$20,000$ next year on loyalty programs to increase the retention rate. How much would the retention rate need to increase to for each segment if the whole sum were spent in that segment? $[6]$

c$.$ Instead of spending on retention, let us say they are going to spend the whole sum to acquire $10$ more customers in one segment. For each segment, how many customers would they have to acquire to breakeven? $($hint: calculate breakeven acquisition rate for each segment and multiply by target size$).[6]$

d$.$ Imagine that growth rates in contribution are different for each segment. They are $10\%,7\%,$ and $5\%$ respectively. Recalculate CLV for each segment. Which segment looks the most attractive now? $[6]$

$\backslash$table$[[,$Small,Large,Business$],[$Segment Size,$80,30,15],[$Price $($monthly$),120,400,1,000],[VC,50,250,380],[r,0\mathrm{.}9,0\mathrm{.}7,0\mathrm{.}65],[d,0\mathrm{.}05,,],[$M$,840,1,800,7,440],[$CLV$,5,040,3,600,12,090],[,,,],[$CLV $,,,]]$