Question: You run a sporting good store in Olean, NY. Your customers are either Townies (residents of the town) or Students (of St. Bonaventure University). Some

 You run a sporting good store in Olean, NY. Your customers

You run a sporting good store in Olean, NY. Your customers are either Townies (residents of the town) or Students (of St. Bonaventure University). Some characteristics of those two segments are as follows: Number in segment Profit per person per year Acquisition Cost per customer Churn Rate per year Townies 1000 $200 $200 20% Students 1500 $300 $300 25% Assume an interest rate of 0%. a. Does a Townie or a Student have a higher LTV? Show your work. You target the Townies and learn that if you incur an $800 increase in your acquisition cost you can either double your profit per year or cut your Churn Rate in half. b. Should you invest the $800 to double the profit per year? Show your work. Should you invest the $800 to halve the Churn Rate? Show your work. C

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