Question: Sprint is curious as to how much value each customer provides to the firm. Management has estimated that it currently costs $10 on average to

Sprint is curious as to how much value each customer provides to the firm. Management has

estimated that it currently costs $10 on average to acquire and attract a new customer. Most

customers sign up for the $79.99/month phone plan with a margin of $61.99. Past audits of the

firms data suggest 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 plan of $99.99 per month with

a cost of $22/month to the firm?

c. What happens to CLV if customer satisfaction decreases and retention drops to 2 years (the

required time of the sales contract)? By how much does CLV change?

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