Krasana Coffee is a new high-end coffee restaurant in Slovakia that sells 1kg bags of beans through independent coffee shops. The bags of roasted beans retail for €16 and Krasana receives €8.12 per bag, which costs €3.50 per bag to produce and deliver. In their first year of business, they sold 20,700 bags primarily in the capital of Bratislava and spent €53,000 on local advertising and promotions. Krasana has one employee focused on marketing and sales whose salary and expenses are €40,000 per year. Based on feedback from the channel and the salesperson, Krasana estimates that the average customer purchased one bag of their coffee every other month. In January, they began to sell the bags directly through their website using a subscription model of one bag per month for the same retail price but delivered to the end customer's door by post at a cost of €5 per bag, including delivery. They supported this effort by spending €32,000 on SEO and Instagram ads. They also continued their traditional advertising and promotional spending in support of the independent coffee shop channel. After three months, they had signed up 1,600 subscribers through their website and still sold 3,600 bags through independent coffee shops. 

If Krasana estimates that each customer will continue to purchase the bags for 2 1/2 years, what is the best estimate of customer CLV?

Answer rating: 100% (QA)

To calculate the Customer Lifetime Value CLV you can follow these steps 1 Calculate the contribution ... View the full answer