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Individual Assignment: Customer
Lifetime Value Metric Use the course materials supplement Customer Lifetime
Value Metric, found on your student Web page, to calculate the lifetime value
of a customer who has recently contracted with Riordan Manufacturing.
Customer Lifetime Value Metric
Read the scenario below, and then use
the table to calculate customer lifetime value.
Scenario
Bilberry Beverages, Inc. is a newly
acquired Riordan Manufacturing customer. Bilberry offers four flavors of berry
soda. Each flavor requires its own bottle. Bilberry needs six pallets per month
for each flavor. Pallets hold 700 bottles. Each bottle costs Riordan 18¢ to
produce and label. Bilberry pays 38¢ per bottle, including shipping. Riordan
absorbs the shipping cost, which is $12 per pallet.
The average contractor remains a
loyal customer of Riordan Manufacturing for 7 years and losses account for only
4% of total sales over the average lifetime of these relationships.
Using these averages, and the figures
provided in the scenario, calculate customer lifetime value for Riordan’s
relationship with Bilberry Beverages, Inc.
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