Use the following equations to help determine the CLV:

Average Customer Acquisition Cost $=$ Customer Acquisition$-$oriented Marketing Expenses per Month$/$Number of New Customers Acquired per Month

Customer Lifetime Value $=[1/(1-$Average Customer Retention Rate$)]$ x $($Average Value of Sales per Year per Customer$)-($Average customer Acquisition Cost $+$ Average Customer Retention Cost$)$

This activity is important because marketing managers need to understand and know how to calculate customer lifetime value as a part of customer relationship management. Knowledge of CLV can inform a number of critical marketing decisions related to such factors as the development of strategies designed to aid in the acquisition, nurturing, and retention of customers.

The goal of this activity is to test your understanding of CLV by considering this example.

You must $(1)$ complete the spreadsheet and $(2)$ answer the questions that follow to receive full credit for this exercise.