Suppose your company introduces a referral incentive for existing customers. Namely, cus- tomers can get a...
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Suppose your company introduces a referral incentive for existing customers. Namely, cus- tomers can get a $500 discount on their customer service subscription for each customer lead that they refer to you. This discount only applies during the year they refer the customer and, as a result, you anticipate that each acquired customer will refer 3 customer leads per year starting on the date that they begin needing to pay for customer service. Since this referral volume implies no payment for customer service, you also expect all customers will keep their customer service subscription indefinitely. Leads referred by existing customers have the same funnel probabilities as the leads coming from the marketing vendor. (f) Assuming that the leads referred by existing customers do not overlap with those coming from the marketing vendor, what is the value of a lead following the introduction of the referral incentive? What is the ratio between the lifetime value of a customer and the cost of customer acquisition? Suppose your company introduces a referral incentive for existing customers. Namely, cus- tomers can get a $500 discount on their customer service subscription for each customer lead that they refer to you. This discount only applies during the year they refer the customer and, as a result, you anticipate that each acquired customer will refer 3 customer leads per year starting on the date that they begin needing to pay for customer service. Since this referral volume implies no payment for customer service, you also expect all customers will keep their customer service subscription indefinitely. Leads referred by existing customers have the same funnel probabilities as the leads coming from the marketing vendor. (f) Assuming that the leads referred by existing customers do not overlap with those coming from the marketing vendor, what is the value of a lead following the introduction of the referral incentive? What is the ratio between the lifetime value of a customer and the cost of customer acquisition?
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