Essay About Rebate Customers And Customer Lifetime Value

Syphone
Case SyPhone (CLV) Using the “MEXL/Customer Lifetime Value/Run Analysis” option in the menu, and a discount factor of 10%, answer the following questions:Question 1. What is the lifetime value of a typical customer in each of the four segments, in current dollar values? Compare these figures to the “Gross margin” figures in the original spreadsheet. What can you learn from this comparison?Segments / Segment descriptionNumber of customersGross margins% change from rebateMarketing costs, next periodCustomer lifetime value% change from rebateCustomer lifetime value GrowthLarge accounts500$63,000 $5,000$118,548 88.17%Large accounts, rebate2000$36,000-43%$4,000$88,831-25%146.75%Small accounts5000$10,800 $1,500$17,388 61.00%Small accounts, rebate7500$7,200-33%$1,000$14,818-15%105.81%Lost customers0$0 $0$0  Answer: From table above, each of the four segments has a positive CLV means all segment give profit for firm. From the comparison between “Gross margin” and “CLV” show that, in long term, rebate customers tend to generate higher profit than no rebate customers. Moreover, when company give 20% rebate (pay $80 instead of $100) to customers which affect to decreasing in gross margin,-43% and -33% for Large accounts rebate and Small accounts rebate respectively compare to decreasing in Customer lifetime value,-25% and -15% for Large accounts rebate and Small accounts rebate respectively which the difference are not as high as -43% and -33% as initial margin. This mean offer rebate to customer will benefit company in long term because rebate will help to decrease churn rate and also increase in CLV.