Which of the following is the formula for calculating the lifetime value of a customer?

A. The amount a person will spend times the cost to maintain the relationship.

B. The amount a person will spend times the cost to maintain the relationship plus the profit generated.

C. The amount a person will spend minus the cost to maintain the relationship.

D. The amount a person will spend plus the cost to maintain the relationship.

E. The amount a person will spend divided by the cost to maintain the relationship.

Question

Kaliyah Finley

Business

6 December, 09:08

Which of the following is the formula for calculating the lifetime value of a customer?

A. The amount a person will spend times the cost to maintain the relationship.

B. The amount a person will spend times the cost to maintain the relationship plus the profit generated.

C. The amount a person will spend minus the cost to maintain the relationship.

D. The amount a person will spend plus the cost to maintain the relationship.

E. The amount a person will spend divided by the cost to maintain the relationship.

+4

Answers (1)

Know the Answer?

Karter Murray · Answer 1

The formula for calculating the lifetime value of a customer the amount a person will spend MINUS the cost to maintain the relationship

Explanation:

Any company must measure the customer lifetime value for its success. Customers are the important factor that decides the growth of any business. They play an important role of buying the goods and services produced by any business. It is required to know how much it costs to attain new customers than retaining the older customers.

By measuring the CLTV, a company can make better decisions like the goals related to marketing, reduction in the cost related to acquisition, customer retention, etc. CLTV can be measured by subtracting the amount spent by a customer from the total cost that is spent in maintaining the relationship with that customer.