Question: this also uses marketing and analytics Customer Lifetime Value: Customer Acquisition (15 points) Kevin, a micro-entrepreneur, operates an online store that sells sport gears. He

this also uses marketing and analytics

Customer Lifetime Value: Customer Acquisition (15 points) Kevin, a micro-entrepreneur, operates an online store that sells sport gears. He provides you with the following customer data card and asks you whether it is profitable for him to get the following new customers: Name: Alice Customer lasts for 2 years Year 1 Year 2 Margin per purchase $128 $291 Survival rate 100% 50% Number of purchases 1 2 Name: Elena Customer lasts for 2 years Year 1 Year 2 1 Margin per purchase $104 $183 Survival rate 100% 75% Number of purchases 2 Kevin tells you that his discount rate is zero and the cost of acquiring a customer (.e., either Alice or Elena) is $350. 9. Does $1 in the expected profit for Year 2 yield the same present value for Kevin as $1 in the expected profit for Year 1P (Hint: This is a Yes/No question.) (3 points) 10. Who is profitable for Kevin to acquire? (i.e., Is it profitable for Kevin to acquire Alice? Is it profitable for Kevin to acquire Elenar(6 points)

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