Problem 2: Customer Lifetime Value (CLV) Compute two lifetime customer values (CLV) based on a one-year customer experience and a five-year relationship. First assume you will sell $25,000 two times per year to your new customer, but for only a single year. The customer will not provide you with any referrals. What is the computed value of a satisfied customer for a single year? Second, run the same calculation, but make these new assumptions: The customer continues to buy $25,000 twice a year for five years. In addition, the customer provides two referral customers that result in one additional customer. Based upon this information, recompute the total value of a satisfied customer. What are the financial differences between a one-year and five-year customer.? How can sellers increase their profitability by computing and adhering to the expected CLVS?

Compute two lifetime customer values (CLV) based on a one-year customer experience and a five-year relationship. First assume you will sell $25,000 times per year to your new customer, but for only a single year. The customer will not provide you with any referrals. What is the computed value of a satisfied customer for a single year? Second, run the same calculation, but make these new assumptions: The customer continues to buy $25,000 twice a year for five years. In addition, the customer provides two referral customers that result in one additional customer. Based upon this information, recompute the total value of a satisfied customer. What are the financial differences between a one-year and five-year customer.? How can sellers increase their profitability by computing and adhering to the expected CLVs