BUAD 680 University of Delaware Customer Lifetime Value Paper
The purpose of this assignment is to let you understand customers in your industry (or in industries you’re interested in) from the CLV lens.
- Calculate Customer Lifetime Value (CLV) for a customer at your firm. Detail your assumptions. If you want to do CLV for a customer in another industry, make sure you have enough data and cite your sources for data. If there are issues of data confidentiality or accessibility, you can certainly make up data.
- Make sure you set up the data correctly. Take a look at the three examples I gave
- You can do any time horizon that makes sense for your customers. If you use a few years then set it up in a table format (again, check out the excel file in the module) or you can use the infinite horizon formula in the page for CLV in this module.
- Change your assumptions about retention rate, growth rate, and discounting factor (=interest rate we use for the present value) and see how results change. Please change them one at a time and change each of them twice (so you have three results to compare). You can draw a graph for each (i.e. one graph with three retention rates, another with three growth rates, and yet another with three discount factors–similar to what I did in the lecture). Explain the changes in the results and what they mean for your company.
