Free Essay

Clv 8700 Profitable

In: Business and Management

Submitted By suprchamp
Words 564
Pages 3
Discount Rate ( d ) 10% Sales Growth = 0% (assumption)
1+d 1.10
Attrition Rate 14% Retention Rate ( r ) 86%
Customer Life Expectancy (1/(1-Retention Rate)) 7.37 Years
8700 Profitable Year "CF if Client
Margin (m)" "Prob Survival
(r^n)" (1+d)^n PV Factor 1/(1+d)^n m*r^n*(1/(1+d)^n) CLV
0 -41 1.00 1.00 1.00 -41.00 -41.00
1 427 0.86 1.10 0.91 335.26 294.26
2 465 0.75 1.21 0.83 287.15 581.41
3 505 0.65 1.33 0.75 244.76 826.17
4 505 0.56 1.46 0.68 192.31 1018.48
5 505 0.48 1.61 0.62 151.11 1169.59
6 505 0.42 1.77 0.56 118.73 1288.33
7 505 0.36 1.95 0.51 93.29 1381.62
8 505 0.31 2.14 0.47 73.30 1454.92
9 505 0.27 2.36 0.42 57.60 1512.52
10 505 0.23 2.59 0.39 45.26 1557.78
11 505 0.20 2.85 0.35 35.56 1593.34
12 505 0.17 3.14 0.32 27.94 1621.28
13 505 0.15 3.45 0.29 21.95 1643.24
14 505 0.13 3.80 0.26 17.25 1660.49
15 505 0.11 4.18 0.24 13.55 1674.04
16 505 0.10 4.59 0.22 10.65 1684.69
17 505 0.08 5.05 0.20 8.37 1693.06
18 505 0.07 5.56 0.18 6.58 1699.64
19 505 0.06 6.12 0.16 5.17 1704.80
20 505 0.05 6.73 0.15 4.06 1708.86
21 505 0.05 7.40 0.14 3.19 1712.05
22 505 0.04 8.14 0.12 2.51 1714.56
23 505 0.03 8.95 0.11 1.97 1716.53
24 505 0.03 9.85 0.10 1.55 1718.07
25 505 0.03 10.83 0.09 1.22 1719.29
26 505 0.02 11.92 0.08 0.96 1720.25
27 505 0.02 13.11 0.08 0.75 1721.00
28 505 0.02 14.42 0.07 0.59 1721.59
29 505 0.01 15.86 0.06 0.46 1722.05
30 505 0.01 17.45 0.06 0.36 1722.41
31 505 0.01 19.19 0.05 0.29 1722.70
32 505 0.01 21.11 0.05 0.22 1722.92
33 505 0.01 23.23 0.04 0.18 1723.10
34 505 0.01 25.55 0.04 0.14 1723.24
35 505 0.01 28.10 0.04 0.11 1723.35
36 505 0.01 30.91 0.03 0.09 1723.43
37 505 0.00 34.00 0.03 0.07 1723.50
38 505 0.00 37.40 0.03 0.05 1723.56
39 505 0.00 41.14 0.02 0.04 1723.60
40 505 0.00 45.26 0.02 0.03 1723.63 7.37 Years 187 0.31 2.14 0.47 27.12 1408.74…...

Similar Documents

Premium Essay

Marketing Managing Profitable Customer Relationships

...Chapter 1 Marketing: Managing Profitable Customer Relationships GENERAL CONTENT: Multiple-Choice Questions 1. Central to any definition of marketing is _____. a. demand management b. transactions c. customer relationships d. making a sale e. making a profit (Answer: c; p. 5; Easy) 2. All of the following are accurate descriptions of modern marketing today, except which one? a. Marketing is creation of value for customers. b. Marketing is customer satisfaction at a profit. c. Selling and advertising are synonymous with marketing. d. Marketing involves building and managing profitable customer relationships. e. None of the above statements is true. (Answer: c; p. 5; Easy) 3. Like NASCAR, successful companies recognize a crucial dimension of an outstanding marketing company to be _____. a. a strong customer focus b. a relentless pursuit of customer needs c. customer relationships built by everyone in the organization d. all of the above e. none of the above (Answer: d; p. 5; Moderate) 4. _____ is defined as a social and managerial process by which individuals and organizations obtain what they need and want through value creation. a. Selling b. Advertising c. Barter d. Marketing e. None of the above is correct. (Answer: d; p. 5; Challenging) 1 5. Society and culture shape the basic form of human needs called _____. a. needs b. wants c. demands d. value e. an exchange (Answer: b; p. 6; Moderate) 6. When backed by buying......

Words: 7756 - Pages: 32

Premium Essay

Can E-Banking Services Be Profitable?

...CAN E-BANKING SERVICES BE PROFITABLE? Olga Luštšik[1] Abstract For the last few years European banks have spent billions of euros into new electronic channels. But after some years of excitement banks long-waited sky-rocketing profits from this area didn’t occur. Estonian banks have also invested in expanding and improving the IT systems and a number of new e-banking services have been developed. Until recent time, most of the pricing decisions for e-bank services were made based on a gut feeling as current financial management information systems didn’t support such analysis. In the article author explores the implementation techniques of Activity Based Costing (ABC) in banking sector on example of an Estonian bank in order to analyze the cost structure for traditional and electronic channel transactions. The article shows how it is possible to implement ABC in banking sector and proofs empirically that electronic channels provide cost saving for banks and for bank clients. JEL classification numbers: G21, L11, L86, M40, O31 Keywords: e-banking, profitability, activity based costing 1. INTRODUCTION A few years ago no self-respecting financial consultant would travel without it: the bar chart showing that the marginal cost of Internet banking transactions was a tiny fraction of the cost of branch banking. It was the chart that launched dozens of stand-alone Internet banks. As a result, European banks have poured billions of euros into......

Words: 7435 - Pages: 30

Premium Essay

Marijuana…….a Profitable Crop Sold to Boost the Economy or a Tool of Destruction?

...Marijuana…….a Profitable Crop Sold to Boost the Economy or a Tool of Destruction? Professor Joan Cormier ENGL-1010-UNIVERSITY GRAMMAR 08 Jan. 2013 Marijuana…….a Profitable Crop Sold to Boost the Economy or a Tool of Destruction? The legalization of marijuana for recreational use is a highly debatable subject in our culture, and it has been for several decades. Marijuana has been approved for medicinal purposes in many states to date, and use has been legally permitted in two states as of this year two- thousand and thirteen. There are numerous pros and cons associated with marijuana use, as with any drug whether it is legal or not. There are legitimate reasons for sanctioned recreational use of marijuana including valuable economic profit, and this dissertation will provide readers with information to support or refute. Why has recreational marijuana use been prohibited and disputed? The fears of the unknown fuel the fires of prohibitionists. Marijuana use was unofficially permissible until “1970” when, according to J. Michael Bostwick, “the United States Congress classified marijuana as a Schedule I substance” making it “illegal.” After all, there are far worse legalized drugs of choice including alcohol, caffeine, and prescription medication. Marijuana users are forced to hide their consumption, work at establishments that do not enforce drug testing, risk time in jail, and pay fines. Whereas, alcohol is legal, readily available at......

Words: 1295 - Pages: 6

Premium Essay

How Accurate Were the Claims of the Southerners That Slavery Was Both Benign and Profitable?

...the antebellum period the South claimed that slavery was not only benign but profitable. These claims have led to a large dived in historians with the majority opposing the South’s claims however the majority are not always right. Well known historians still stand on the side of the Southerners claims, historians including Ulrich Phillips and Fogel and Engerman, arguing that the conditions so often used to discredit slavery are the rare cases of extreme nature and should not be used to make the Southerners claims any less accurate. Countless times power has been abused throughout history, obviously not making it right, but in most cases during the antebellum period slaves lived in similar conditions to most Americans. The conditions of slavery stayed benign and the extreme cases remained rare. The fact that slaves were expensive is proof that masters would not waste them if they were to remain profitable. Plantation masters were entrepreneurial business men and not as Eugene Genovese described them ‘paternalistic’. Focused on making capital it is clear that the South was correct to describe slavery as profitable as it remains on the same level as those in the north invested in industry. The idea that the Southerners claims were inaccurate due to extreme cases seems ridiculous and remains why in the majority of cases the Southerners claims that in the antebellum period slavery was benign and profitable. The Southerners claim that slavery was benign and similar of an......

Words: 1933 - Pages: 8

Premium Essay

Making Sustainability Profitable

... Michael, J. Jurgens, S. Rangan. 2013. Making sustainability profitable. Harvard Business Review. Vol. 91, Issue 3, Page 110—114.) is the sustainability in emerging market businesses. The main aim of the article is to show how companies in emerging markets can gain advantages against big western companies in changing their methods to sustainable methods and how they can make sustainability profitable. The authors are analysing a research from the Boston Consulting Group, which identified “companies with the most effective sustainability practise in the developing world” (p.111). The research includes 1000 companies with different sizes, and which are from a wide range of industry areas. The organisations are from Latin America, Africa, the Middle East, Asia and the South Pacific. The authors came up with the idea, that the above mentioned companies had to use one or more of three special approaches to make their environmental effort financial profitable. Some looked far into the future and invested initially in more-expensive sustainable operations, which led later to lower costs and higher yields. Others began with small changes to gain cost savings, which they used for investments in more-innovative technologies, which made their production more efficient. And others put their sustainability efforts on their costumers and supplies to gain from their buying-power. To make sustainability profitable the authors say, that a company should use at least one of the......

Words: 1149 - Pages: 5

Premium Essay

Apples Profitable but Risky Strategy

...Strategic Management Case plus Case Answer – Apple’s Profitable but Risky Strategy Case study Apple’s profitable but risky strategy When Apple’s Chief Executive – Steven Jobs – launched the Apple iPod in 2001 and the iPhone in 2007, he made a significant shift in the company’s strategy from the relatively safe market of innovative, premium-priced computers into the highly competitive markets of consumer electronics. This case explores this profitable but risky strategy. Note that this case explores in 2008 before Nokia had major problems with smartphones – see Case 9.2 and Case 15.1 for this later situation. Early beginnings To understand any company’s strategy, it is helpful to begin by looking back at its roots. Founded in 1976, Apple built its early reputation on innovative personal computers that were par-ticularly easy for customers to use and as a result were priced higher than those of competitors. The inspiration for this strategy came from a visit by the founders of the company – Steven Jobs and Steven Wozniack – to the Palo Alto research laboratories of the Xerox company in 1979. They observed that Xerox had developed an early version of a computer interface screen with the drop-down menus that are widely used today on all personal computers. Most computers in the late 1970s still used complicated technical interfaces for even simple tasks like typing – still called ‘word-processing’ at the time. Jobs and Wozniack took the concept back to Apple......

Words: 2834 - Pages: 12

Premium Essay

Clv Marketing

...MKTG430-F1WW (F14) CLV By: Lee Irorere Prof. Eric Hutchinson October 27, 2014 Organization: Sneakers on Fire Aaron115 Nicholas 95 Brandon 130 Orlando 125 Christopher 135 Pete 115 Devin 75 Quincy 130 Eric 110 Ryan 90 Fredrick 140 Shawn 65 Geoffrey 95 Tristan 20 Howard 50 Ugo 90 Ike 110 Vick 130 Jordan 140 William 95 Kevin 120 Xavier 100 Leonard 90 Yahshua 85 Michael 35 Zackary 115 The data that I have above is the concept of how CLV works for our company. The values that are presented represent not dollars but an index. Here is how the index works: Xavier has an average value customer score of 100. Howard on the other hand has a value score which is 50. The customer CLV becomes more valuable when your CLV value score is higher. For this organization we target the CLV customers that are in the 80s, 90s, and 100s. The customers with the highest scores are our most valuable customers and they are in the group I call the “loyal customers”. These are customers I see on a regular basis and make purchases regularly and they come in around 5-10 times a year. The average CLV for the “loyal customers” is 10 visits for 5 years which equals 50. The customers spend on average $80 per visit. We make 15 % profit on the $80. 15% of $80 is $12. Our company makes an average of $12 of profit on every visit. The average frequency per customer is 1.1 times. The average CLV of a loyal customer would be 1.1 x $12 = $13.20. Lastly $13.20 x 50 visits per 5 years...

Words: 513 - Pages: 3

Premium Essay

Statistical Methodology for Profitable Sports Gambling

...Profitable Sports Gambling Fabián Enrique Moya B.Sc., Anáhuac University, 2001 Project Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Science Statistical Methodology for by Department of Statistics and Actuarial Science Faculty of Science in the SIMON FRASER UNIVERSITY Summer 2012 © Fabián Enrique Moya 2012 All rights reserved. However, in accordance with the Copyright Act of Canada, this work may be reproduced, without authorization, under the conditions for “Fair Dealing.” Therefore, limited reproduction of this work for the purposes of private study, research, criticism, review and news reporting is likely to be in accordance with the law, particularly if cited appropriately. Approval Name: Degree: Title of Project: Examining Committee: Fabián Enrique Moya Master of Science (Applied Statistics) STATISTICAL METHODOLOGY FOR PROFITABLE SPORTS GAMBLING Chair: Dr. Carl Schwarz, Professor Dr. Tim Swartz Senior Supervisor Professor Dr. Paramjit Gill Committee Member Professor, Department of Mathematics and Statistics University of British Columbia – Okanagan Dr. Joan Hu External Examiner Professor Date Defended/Approved: July 24, 2012 ii Partial Copyright Licence The author, whose copyright is declared on the title page of this work, has granted to Simon Fraser University the right to lend this thesis, project or extended essay to users if the Simon Fraser University Library, and to make partial or...

Words: 12142 - Pages: 49

Premium Essay

7 Habits of Highly Profitable Traders

...7 Habits of Highly Profitable Traders. Habit #1 - The Habit of Trading ONLY with Risk Capital Many people have entered the activity of trading with money they could not afford to lose and as a result they started off trading with "scared" money. They' re fear of loss was bigger than they're desire for gain and they traded with a nervous and anxious state of mind. Scared money never wins. It's wrong to borrow money to trade or take out a second mortgage on your home for trading capital. The way to begin is to determine how much you could afford to lose financially and then from that amount determine how much money you could afford to lose emotionally. Many beginning traders will look to their accountant, financial planner or spouse for advice regarding the amount they could lose financially without considering the emotional side. If your accountant says you could afford to lose Rs. 5, 00, 000 without it severely impacting your financial status, the next thing to do is ask yourself "How would I feel if I lost Rs. 500000 trading in the next 12 months"? As you can see, financially allocating an amount of money for risk capital is very different form emotionally allocating it. Anything can and will happen in the market. Develop the habit of only trading with money you can afford to lose financially and emotionally. Habit #2 - The habit of accepting full responsibility for their own trades. Successful traders always take full responsibility for their own actions in all...

Words: 1318 - Pages: 6

Premium Essay

Marketability of a Profitable Membership Site

...PROFITABLE MEMBERSHIP SITE AND MARKETABILITY It is less known to all and sundry that a membership site offering outstanding interactive features is more popular than any other sites combined focusing attention on profitable membership site and marketability. The world is always bombarded by wars here and there, and the internet suffers the same fate albeit literally. Internet portals are competing with one another for internet users worldwide, the more popular they would be the more income they would earn. These sites are usually fabricated to serve the communication-hungry net citizens who are unable to separate virtual from reality when it comes to life experience. The best remedy or the proper option to improve any chance of earning modest profit is by developing the marketability of the website. Doing this is the combination of hard work and patience as no overnight magic could produce the results one desires to have promptly. Marketing encompasses various stages of execution and no one market strategy is successful without the concurrence and influence of other strategies. It is an integrated process and disregarding an important detail or any deviations from proper steps spell disaster to the product’s marketability, and financial distress to its sellers. For marketability to work, a site should contain features that are mostly “searched” and “clicked” by users. One may secure data on internet users’ statistics to determine the prevailing trend in......

Words: 533 - Pages: 3

Premium Essay

Why Is the Soft Drink Industry so Profitable?

...The soft drink industry is very profitable and it can be analyzed using Five Forces analysis. Each force contributes in different extent to the industry profitability. The supplier power is low. The input required by concentrate producers (CP) consisted of color, citric acid, natural flavors and caffeine; while bottlers mainly purchased packaging (including cans) and sweeteners. These inputs are all relatively standardized materials that can be easily found and bought from large amount of suppliers. CP like Coke and Pepsi are the metal can industry’s largest customers. The switching costs are low, if citric acid’s price is high and industry now prefers phosphoric; and the firms could switch easily to corn syrup when sugars (sweetener) are expensive. Hence suppliers have weak power and industry costs are low. Different retail channels have varied buyer powers. The major buyers are supermarkets, fountain outlets, vending machines. Generally, none of them have apparently high bargaining power on price, since consumers think soft drink are important (exhibit 1) and there are not many perfect alternatives. Supermarkets: there are so many supermarkets competing each others, so their power is not high. But they do have power on self-space controlling which the soft drink firms will fight for. However, another buyer category, mass merchandisers like Wal-Mart, have relatively more higher profits and power since their purchasing volume are so high that the industry will value them...

Words: 540 - Pages: 3

Premium Essay

Apple's Profitable but Risky Strategy

...APPLE’S PROFITABLE BUT ISKY STRATEGY Case Study [Type the author name]   CASE STUDY ON PROFITABLE BUT RISKY STRATEGY OF APPLE INTRODUCTION: A long term plan and action that is formulated to help a company to setback and achieve a competitive advantage against its competitor and rival is called competitive strategy. This type of strategy is frequently used in marketing, promotion and advertising operations by somehow questioning the rivalry's service or product. Competitive strategies are vital to businesses which are competing in markets for the leading position, the market which is deeply saturated with substitutes for consumers. (Porter,2008). This case study is truly about the competitive strategy of Apple. Apple was founded in 1976 by two Steve Job and Steve Wozniak. Apple initiated its early reputation by making user friendly personal computers and keeping the price high against those made by the competitors. Their first computer was the Apple Macintosh (MAC). It was launched in 1984. From the very first, Apple’s strategy was innovative and profitable. Innovation brings risk with it. So Apple always followed innovative, risky but a highly profitable strategy. Apple is a front line company in industry of electronics whether in cell phones, tablets, personal computers and music devices etc. Apple’s software is actually the one which is greatly designed and programmed. Apple charge premium and comparatively high price from the consumers when compared with......

Words: 2533 - Pages: 11

Premium Essay

Remaining Profitable Yet Competitive in the Market

...Remaining profitable yet competitive in the Market It is true that an increase in the number of sales is not an indicator of a higher profit. Especially, in the scenario when there are many competitors in the market, one has to decrease the margin which doesn’t remain profitable at all. A DSL community member running an online store also shares the same notion. Thus besides Google ranking, advertisement and other factors, price comes at the number 1 position in determining the profit in competition. Even when the question of attracting more and more clients, prices comes can’t just be dropped to a lower level. The supplier helps a lot in determining the total cost to be charged from the customers plus the total number of sales a business can make. Suppliers definitely have a direct control on the price and some also do price control to keep their selling continue. How to go about the price control? The influence of the suppliers is exhibited by MSRP, MAP and the Wholesale Cost. MSRP or “Manufacturers’ suggested retail price” is the rate determined by the suppliers for the retailer to sell their products at. But it is also true that no retailer sell at MSRP. Then, comes the Wholesale Cost, which is the price of the product you buy from the supplier. MAP or “Minimum Advertised price” is the threshold or the minimum amount set by the supplier for the retailers to sell their products at. If you tend to go below the determined MAP rate, you may harm your relationship with......

Words: 801 - Pages: 4

Premium Essay

Starbuck's Strategy and Internal Initiatives to Return to Profitable Growth

...Starbucks’ Strategy and Internal Initiatives to Return to Profitable Growth Arthur A. Thompson The University of Alabama ince its founding in 1987 as a modest nine-store operation in Seattle, Washington, Starbucks had become the world’s premier roaster and retailer of specialty coffees, with 8,812 company-owned stores and 7,852 licensed stores in more than 50 countries as of April 2010 and annual sales of about $10 billion. But the company’s 2008–2009 fiscal years were challenging. Sales at company-owned Starbucks stores open 13 months or longer declined an average of 3 percent in 2008 and another 5 percent in 2009. Company-wide revenues declined from $10.4 billion in fiscal year 2008 to $9.8 billion in fiscal year 2009. During fiscal 2009, Starbucks closed 800 underperforming company-operated stores in the United States and an additional 100 stores in other countries, restructured its entire operations in Australia (including the closure of 61 stores), and reduced the number of planned new store openings by more than 200. Starbucks’ global workforce was trimmed by about 6,700 employees. The company’s cost-reduction and laborefficiency initiatives resulted in savings of about $580 million. Exhibit 1 shows the performance of Starbucks’ company-operated retail stores for the most recent five fiscal years. In his November 2009 letter to company shareholders, Howard Schultz, Starbucks’ founder, chairman of the board, and chief executive officer, said: Two years ago, I......

Words: 22517 - Pages: 91

Premium Essay

10 Profitable Tips for Exporters and Importers

...TEN PROFITABLE TIPS FOR EXPORTERS AND IMPORTERS Copyright 2012 by Joseph Zodl P.O. Box 22292, Phoenix, Arizona 85028 1. Trade in products you know and understand. Whether it's sporting goods or diesel locomotives, domestic sales or international sales, you have to know the product to be able to succeed. 2. Learn the basics first. You can't learn everything. Be an expert in your product. Learn the basics of international marketing, payment, and customs. Many community colleges have inexpensive courses. Contact the U.S. Department of Commerce, your state Department of Commerce, and the Small Business Administration. They have seminars and conferences, and can tell you about other resources. 3. Ask for assistance from the experts. Before you begin, talk with a bank's international department (at most large banks), and with a Freight Forwarder (exports) or Customs Broker (imports). These specialists are listed in the Yellow Pages. 4. Keep in touch with all of your sales leads. Put together a mailing list and make sure they hear from you three or four times a year. Don't let them go to someone else. 5. For success in exporting: A) Get the order. B) Make sure you're going to get paid for the order. C) Ship the order. 6. For success in importing: A) Figure ALL costs, including transportation, insurance, Customs duties, then double-and triple-check them. B) Pre-sell (have......

Words: 466 - Pages: 2