Week 3 Quiz on CLV

Monthly subscription cost: $25

Average retention marketing costs per customer: $10 per month

Average length of customer relationship: 40 months

Weekly margin: $15

ANNUAL spending on customer retention: $260 per customer

Billing: At the beginning of the month

Average monthly net margin: $100 per month

Retention rate (r): 98%

Discount rate (d): 1%

Billing: End of the month

Monthly margin: $300

Annual retention spending: $300

Monthly retention (r): 90%

Discount rate (d): 5%

Billing: Beginning of the month

Monthly margin (M): $2 per customer

Annual retention spending (R): $12 per customer

Monthly retention (r): 50%

Discount rate (d): 2%

Monthly margin (M): $125 per customer

Monthly retention spending (R): $25

Monthly retention rate (r): 50%

Monthly margin (M): $60 per customer

Monthly retention spending (R): $10

Monthly retention rate (r): 75%

Monthly margin (M): $175 per customer

Monthly retention spending (R): $25

Monthly retention rate (r): 70%

M = $50

d = .07

If R = $25, then r = 75%

If R = $20, then r = 60%

If R = $15, then r = 65%

If R = $10, then r = 50%

If R = $5, then r = 45%

Tip: You can calculate each combination individually to arrive at an answer, but to really hone your understanding of CLV and how the various components interact, I encourage you to set up a spreadsheet with the appropriate formulas and play around with the numbers, assuming a spend from 0 to $50 and different retention rates.