Customer Lifetime Value - A Case Study Essay Example for Free

Customer Lifetime Value A Case Study EssayA Your manager asks you what you think might explain the differences in p, r, and AC between the three groups. What would you say? i Group 1s higher p could be due to the fact that this group of students doesnt deem the repast plan that undergrad students who live on (or close to) campus have. Addition all in ally, some MBA students may have longer kinfolkes than the typical undergad student, especially on weekends. The MBA students may be more inclined to buy more food to save and snack on during class sessions. The retention probability through a certain time r is expected to be higher for undergrad students who live on or impending to campus and can easily walk to the sandwich shop. MBA students still have a high retention rate, but following the completion of their MBA program, theyre less liable(predicate) to drive to Ikes for food since they commute to school (especially if they have a good sandwich shop from where they commute ). Regarding AC, the cost to promote Ikes for people familiar with the ara (Group 2) is expected to be lower beca practise the Bay Area natives already have some knowledge of Ikes.The AC for Groups 1 3 are higher because Ikes must promote their business to people who have most likely never heard of the sandwich shop through ads, Facebook, or coupons. b What do you think could be done to improve CLV for any of the groups? Describe a specific action that can be interpreted by Redhead and explain how it alters the variables and CLV in the table for one or more groups. ii I expected the CLV for Group 3 to be higher considering the distance from the school. It could be so low due to the meal plan those students might have, but by decreasing the AC from 25 to 20, CLV will increase from 2. to 7. 5.The can be done by focusing their advertising efforts aimed at students to strictly on campus efforts. Perhaps they could also employ social media for free advertising and introduce a punch c ard where after a certain amount of sandwiches bought, the customer can get a free one. This would possibly help increase the retention rate of all groups, especially Group 1 where these MBA students dont have an on campus meal plan and often look for good food and money saving incentives off campus.Additionally, if the retention rate for Group 1 went from . 0 to . 825 through the use of the punch cards and evening coupons for a free drink or chips, the CLV would increase from 7 to 11. 667 almost putting Group 1 even with Group 2. And if the retention rate for Group 3 went from . 825 to . 85 through the use of the punch cards again, the CLV would increase from 2. 5 to 6. 875. I guess that by using more free social media advertising (decreasing AC) and increasing retention rate r through punch cards and coupons, the CLV for all groups will increase.