1.3 Lifetime Value of a Customer (Figure 1-11)

Analysis Scale
Customer Retention
80%
%
 
Customer Life
 
Year 0 1 2 3 4 5 6 7 8 9 10
Customer Margin
$0
$
$30
$
$42
$
$44
$
$49
$
$55
$
$0
$
$0
$
$0
$
$0
$
$0
$
Acquisistion Cost
-$51
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
Retention Cost
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
Net Profit
Discount Rate
10%
%
 
Present Value
Multiplier
Net Present Value
Lifetime Value of Customer
 
Starting Data Scale
Customer Retention
80%
%
 
Customer Life
 
Year 0 1 2 3 4 5 6 7 8 9 10
Customer Margin
$0
$
$30
$
$42
$
$44
$
$49
$
$55
$
$0
$
$0
$
$0
$
$0
$
$0
$
Acquisistion Cost
-$51
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
Retention Cost
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
$0
$
Net Profit
Discount Rate
10%
%
 
Present Value
Multiplier
Net Present Value
Lifetime Value of Customer
 
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