Use the following numbers to create a customer LTV chart. Determine the third year LTV

Here are the the questions 5-9 for your ready reference from Ch 3. Please write the steps (analytic plan) to answer these questions. You do not need to show numbers but demonstrate that you understand how to do this.

5. Use the following numbers to create a customer LTV chart. Determine the third year LTV

Customers:  746,219;  Retention rate   44%; Visits per year  1.2 Growing 20% per year;  Average order size $104.40  Growing 10% per year;  Marginal costs:  55%;  Database and Marketing Costs:  10% of revenue ;  Discount rates  1,  1.1,    1.21

6.                Introduce a birthday club into the same store as the previous question(No.5) .  Show 3 rd  year LTV. Use these numbers.

Customers:  746,219; Retention rate  64%; Visite per year  1.8 growing 20% per year; Average Order Size  $110.44 growing 10% per year;  Marginal Costs 55%; Database and Marketing costs  $10% of revenue; Birthday Club  $0.95 per customer.  Discount Rates: 1, 1.1,  1.21

7. What is the profit gain from introducing the Birthday Club in the third year assuming 746,219 customers?

• Add e-mails and website to a retailer using the following numbers and determine 3rd year LTV.

Customers: 746,219;  Retention rate  64% flat;  Store visits per year  2.1 up 5% per year; Website sales per year  1.9  up 5% per year;  e-mail sales per year  1.2 up 5% per year ;  Total sales 5.2;  Average order size  $133.63  up 5% per year.  Marginal costs  45%  flat;  Database and marketing 20% of revenue flat;  Discount rates:  1.  1.1,  1.21

• In the above example, what are the increased third year profits after adding the website and e-mails?