Customer Lifetime Value - A Case Study Essay Example for Free

Customer aliveness Value A Case Study EssayA Your manager asks you what you think might rationalize the differences in p, r, and AC between the three groups. What would you say? i root 1s high p could be due to the fact that this group of students doesnt have the meal plan that undergraduate students who live on (or close to) campus have. Additionally, some MBA students may have longer classes 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 with a certain time r is expected to be higher for undergrad students who live on or closer to campus and can easily walk to the organize shop. MBA students still have a high retention ordinate, but following the completion of their MBA program, theyre less(prenominal) in all likelihood to drive to Ikes for food since they commute to school (especially if they have a thoroughly depart up shop from where they commute). Regarding AC, the cost to promote Ikes for people familiar with the area ( separate 2) is expected to be lower because 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 taken 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 sum up from 2. to 7. 5.The can be done by focusing their ad efforts aimed at students to strictly on campus efforts. Perhaps they could also utilize social media for free advertising and familiarise a pun ch card 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 even 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 believe 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.