Question: Sprint is curious as to how much value each customer provides to the firm. Management has estimated that it currently costs $15.00 on average to
Sprint is curious as to how much value each customer provides to the firm. Management has estimated that it currently costs $15.00 on average to acquire a new customer. Most customers sign up for the $99.99/month phone plan with a margin of $59. Past audits of the firms data suggests that most customers remain with Sprint for 10 years. What is the CLV? What if the salesperson upsells new customers to the premier plan with a customer price of $119.99 per month with a cost of $37/month to the firm? What happens to CLV if customer satisfaction decreases and retention drops to 4 years (the required time of the sales contract)?
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