A Back-Of-The-Envelope Approach to Calculating Lifetime Customer Value (LCV)is a Margin

question 33

Multiple Choice

A back-of-the-envelope approach to calculating lifetime customer value (LCV) is a margin "multiple," which can be used to multiply the current margin generated by each customer to estimate the LCV.This multiple is shown by the formula: r/(1 + i + r) .In this formula,"r" stands for:

• A)retention rate for the product.
• B)failure rate for the firm's products.
• C)rate of return of the product by the customers.
• D)the reliability of the product.

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Definitions:

Compensation

The total amount of the monetary and non-monetary pay provided to an employee for their work, including salaries, bonuses, benefits, and any other form of payment.

Pricing Aggressively

A strategy where a business sets lower prices with the aim of gaining market share or driving competitors out of the market.

Specific Threshold

A determined point or value at which an action is triggered or a change occurs, often used in contexts such as operations, finance, and technology.

Relevant Information

Information that is applicable and helpful in making a decision, typically due to its timeliness, accuracy, and context.