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Clv Marketing

In: Business and Management

Submitted By Anthony2014
Words 513
Pages 3
MKTG430-F1WW (F14)
CLV
By: Lee Irorere
Prof. Eric Hutchinson
October 27, 2014

Organization: Sneakers on Fire
Aaron115
Nicholas 95
Brandon 130
Orlando 125
Christopher 135
Pete 115
Devin 75
Quincy 130
Eric 110
Ryan 90
Fredrick 140
Shawn 65
Geoffrey 95
Tristan 20
Howard 50
Ugo 90
Ike 110
Vick 130
Jordan 140
William 95
Kevin 120
Xavier 100
Leonard 90
Yahshua 85
Michael 35
Zackary 115

The data that I have above is the concept of how CLV works for our company. The values that are presented represent not dollars but an index. Here is how the index works: Xavier has an average value customer score of 100. Howard on the other hand has a value score which is 50. The customer CLV becomes more valuable when your CLV value score is higher. For this organization we target the CLV customers that are in the 80s, 90s, and 100s. The customers with the highest scores are our most valuable customers and they are in the group I call the “loyal customers”. These are customers I see on a regular basis and make purchases regularly and they come in around 5-10 times a year. The average CLV for the “loyal customers” is 10 visits for 5 years which equals 50.
The customers spend on average $80 per visit. We make 15 % profit on the $80. 15% of $80 is $12. Our company makes an average of $12 of profit on every visit. The average frequency per customer is 1.1 times. The average CLV of a loyal customer would be 1.1 x $12 = $13.20. Lastly $13.20 x 50 visits per 5 years equals $660 for the average CLV loyal customers. The second group that I have is the customers I call the “nonmembers”. They are the ones who scores below the 80s. I do not target any loyalty programs or any long term ideas towards them because my company will lose money. Those customers would probably spend significantly less than $80 per visit. They would spend right around $50 per visit. We...

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