? Sprint
< Back
2:02 AM
* 60%
Chapter 5 worksheet.docx
Chapter 5 Assignments
30 Points Possible
Formatting:
• Be sure to use complete sentences and proper labeling (numbers, dollars,
etc.)
• Make sure to review the grading rubric in Canvas
• Be sure to show all of your calculations
For You Massage is a new concept massage service with a monthly
subscription. You pay a fee each month towards spa services. Their
monthly fee is $29.95 per month. Variable costs for products and supplies
total $2.50 per customer. The spa spends about $5.40 per year per
customer. They are able to retain about 85% of their customers each
month. The monthly discount rate is 1.5%.
To gain more customers, the spa is planning to spend $75,000 on a direct
mail coupon reaching 90,000 homes in the area. They estimate that they
will get about 2% of the homes to take advantage of the coupon and
become new customers. The intended margin after customers redeem the
coupon is $12.
In total for the year, they intend to run the direct mail plan 4 times each
time acquiring about 1,800 customers each time In addition to the
spending to acquire new customers, they also spend about $100,000 on
loyalty programs to keep their 135,000 current customers.
1. Calculate the CLV
2. Calculate the PLV
3. Calculate average acquisition cost
4. Calculate average retention cost
5. Remembering that not all customers are created equal, explain how to
analyze the effectiveness and efficiency of value of customers and
their marketing spending. In other words, how do you know what
customers you want to keep and what customers you don't? How
does that effect your marketing spending?
800
Courses
Calendar
To Do
Notifications
Inbox
