Question: Sprint is curious as to how much value each customer provides to the firm. Management has estimated that it currently costs $7.50 on average to

Sprint is curious as to how much value each customer provides to the firm. Management has estimated that it currently costs $7.50 on average to acquire and attract a new customer. Most customers sign up for the $79.99/month phone plan with a margin of $60. Past audits of the firms data suggests that most customers remain with Sprint for 7 years.

a. What is the CLV?

b. What if the salesperson upsells new customers to the premier plans $109.99 per month with a cost of $35/month to the firm?

c. What happens to CLV if customer satisfaction decreases and retention drops to 3 years (the required time of the sales contract)?

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