Coursera Marketing Analytics — Week #3

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Quiz — Couresera Marketing Analytics Course. Week #3. Customer Lifetime Value.

1.

If the discount rate assumption increases, what will happen to CLV?

Remain the same

Decrease

Not enough information

Increase

2. 

Palmetto Digital sells a web-based marketing design subscription service for $25 / month and has no variable costs associated with this subscription. Average retention marketing costs per customer are $10 / month and the expected customer lifetime is 40 months. What is the expected CLV?

$400

$600

$1,000

$1,600

3. 

How could you calculate the increase in CLV valuation from changing payment from the end of a period to the beginning of a period?

The difference is always equal to the cost of the service or product

Subtract [$M-$R]x[r/(1+d-r)] from [$M-$R]x[(1+d)/(1+d-r)]

Subtract [$M-$R]x[(1+d)/(1+d-r)] from [$M-$R]x[r/(1+d-r)]

The difference is always equal to the price of the service or product

4. 

Natural Farms, an organic CSA, provides a pick-your-own service at their farm at a price of $15 / week for a bushel of vegetables. There are no variable costs and they spend $260 / year on customer retention. What is the short-term multiplier for the CLV formula?

-$245

$10

$15

Without the retention rate, it is impossible to calculate the short-term multiplier

5. 

Ink on Demand provides printer cartridge refills for home printers. They bill on a monthly basis at the beginning of the month. If their average monthly net margin is $25, the retention rate is 95%, and the appropriate monthly discount rate is 2%, what is the long-term multiplier?

$1.02

$13.57

$14.57

$25

6. 

A cleaning service on average generates a margin of $80/week per customer and spends an additional $1040 per year on retention marketing for each customer. Weekly retention is 96% and the appropriate discount rate is 2%. What is the CLV for an average customer if they charge their customers credit card at the end of the week?

$960

$1,020

$1,280

$1,360

7. 

In June, Sharp Internet services had 100 customers who generated a margin of $50 per month each. If their monthly retention rate is 80% and they spend $0 on marketing costs for retention, what will be the total net profit for the month of August?

$3,000

$3,200

$4,000

$5,000

8. 

If the retention rate increases, what will happen to the short-term multiplier?

Increase

Remain the same\

Decrease

Not enough information

9. 

FlexTime offers flexible workspace for small businesses and individuals. A monthly membership costs $200 with no variable costs. Monthly retention rates are 95% and they spend $600/member per year on marketing for retention. What is their CLV presuming a 3% monthly discount rate and that they are paid in advance?

$1,781.25

$1,931.25

$2,375

$ 2,575

10. 

Why is CLV an important driver of company profitability?

As discount rates decrease, CLV increases resulting in higher profits for a company.

Companies can realign resources with their most profitable customers based on CLV.

Salespeople can earn higher commissions on new business.

In an increasingly competitive business environment, new customer acquisition is more important than ever.