Question #259512

Imagine you started your own taxi business in Toronto. The average customer takes approximately 3 rides and spends $70 a month. For each ride, 50% of the fare goes to the driver, and $2 goes to the administrative and maintenance costs. Assuming 36% of riders find alternative travel arrangements and don’t use the taxi company the following year and the discount rate is 3% per year. What is the CLV?


The answer is $865.54

Can you show me how to get that answer please

1
Expert's answer
2021-11-02T03:50:02-0400

CLV margin is the difference between the revenue you receive from a customer and all of the costs associated with that customer in a given timeframe. To get CLV, it is then multiplied by your retention rate and divided by one plus your average discount rate minus your retention rate.

CLV=RevenueTime(1+retention/rate)CLV=Revenue*Time *(1+retention/rate)

Revenue=70Revenue=70

Timespan; since 36% find alternative means then in a year =0.6412=0.64*12

Time Span =7.68=7.68

Rate=[1+(0.030.64)=[1+(0.03-0.64) =0.39=0.39

Then the retention should be =10.39=0.61=1-0.39 = 0.61

Therefore the CLV should be;

CLV=707.681.61CLV=70*7.68*1.61

CLV=865.54CLV=865.54


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!
LATEST TUTORIALS
APPROVED BY CLIENTS