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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