CLV Assignment (50 points)
Due: Monday, June 8, 2020
Calculate Cumulative CLV for following:
Question 1 (a, b, c):
Government (a)
Educational Institution (b)
Small Business (c)
Cost of solicitation
$1,000
$500
$500
Response rate
5%
10%
20%
Time Horizon (Years)
4
5
5
Average spend/custome
per orde
1000
500
200
Number of Orders (Yearly)
25
30
50
Margin
60%
50%
50%
Ongoing Marketing costs
$500
$200
$200
Retention rate (r)
70%
60%
50%
Time: Discount rate (d)
10%
10%
10%
Based on cumulative CLV, which segment should be targeted?
Question 2:
Year 1
Year 2
Year 3
Cost of solicitation
1000
Response rate
5%
Avg. Number of purchases per yea
10
10
12
Avg. purchase/order size (per order)
1000
700
500
Margin
50%
50%
50%
Ongoing Marketing costs
$500
$300
$250
Retention rate (r)
70%
70%
70%
Time: Discount rate (d)
10%
10%
10%
Question 3:
Year 1
Year 2
Year 3
Cost of solicitation
$50
Response rate
10%
Avg. Number of purchases per yea
25
30
30
Avg. purchase/order size (per order)
50
30
25
Margin
50%
50%
50%
Ongoing Marketing costs
$50
$30
$25
Retention rate (r)
90%
90%
90%
Time: Discount rate (d)
10%
10%
10%
CLV Assignment (50 points)
Due: Monday, June 8, 2020
Year 0
Calculate Cumulative CLV for following:
Question 1 (a, b, c):
Government (a)
Educational Institution (b)
Small Business (c)
Cost of solicitation
$1,000
$500
$500
Response rate
5%
10%
20%
Time Horizon (Years)
4
5
5
Average spend/custome
per orde
1000
500
200
Number of Orders (Yearly)
25
30
50
Margin
60%
50%
50%
Ongoing Marketing costs
$500
$200
$200
Retention rate (r)
70%
60%
50%
Time: Discount rate (d)
10%
10%
10%
Based on cumulative CLV, which segment should be targeted?
Question 2:
Year 1
Year 2
Year 3
Cost of solicitation
1000
Response rate
5%
Avg. Number of purchases per yea
10
10
12
Avg. purchase/order size (per order)
1000
700
500
Margin
50%
50%
50%
Ongoing Marketing costs
$500
$300
$250
Retention rate (r)
70%
70%
70%
Time: Discount rate (d)
10%
10%
10%
Question 3:
Year 1
Year 2
Year 3
Cost of solicitation
$50
Response rate
10%
Avg. Number of purchases per yea
25
30
30
Avg. purchase/order size (per order)
50
30
25
Margin
50%
50%
50%
Ongoing Marketing costs
$50
$30
$25
Retention rate (r)
90%
90%
90%
Time: Discount rate (d)
10%
10%
10%