Question One - Use the LTV Case Study numbers (in the Word doc) and determine from an overall profitability standpoint, which is better:

• The starting numbers in the case
• OR
• An offer of 2 Honeybell Cheesecakes for $79.00 with the following changes
• 1.05% Average Response, 50% COGS, $8.00 Fulfillment, and Response per Year of 16%, 13%, and 11% (No other changes)

Lifetime Value Category Entry Column Results Column Entry Column Results Column Entry Column Results Column Cost to reach a prospect $0.65 $- $- Average response 1.10% 0.00% 0.00% Advertising Cost to aquire a customer $59.09 #DIV/0! #DIV/0! Average Initial Order $65.00 $- $- Average Initial COGS% 50.00% 0.00% 0.00% Initial Fulfillment Cost $5.00 $0.00 $0.00 Profiton initial sale $27.50 $0.00 $0.00 Initial investment per customer 31.59 #DIV/0! #DIV/0! Cost to reach a customer $0.55 $- $- Number of customer contacts/year 8.0 0.0 0.0 Annual marketing cost $4.40 $- $- Response Rate Per Contact Per Year Per Contact Per Year Per Contact Per Year Year One 15.00% 1.2 0.00% 0 0.00% 0 Year Two 10.00% 0.8 0.00% 0 0.00% 0 Year Three 7.00% 0.56 0.00% 0 0.00% 0 Average Repeat Order $60.00 $- $- Avg Repeat COGS% 50% 0% 0% Repeat Order Fulfillment Cost $4.00 $0.00 $0.00 Profit per Customer Per Year Year One $26.80 $- $- Year Two $16.40 $- $- Year Three $10.16 $- $- Time Value of Money and Risk Factor Discount 0.00% 0.00% 0.00% Future Value of Profit per Customer Per Year Year One $26.80 $- $- Year Two $16.40 $- $- Year Three $10.16 $- $- 3 Year Lifetime Value $21.77 #DIV/0! #DIV/0!