Customer Lifetime Value †A Case Study Essay

A Your manager asks you what you think might formulate the differences in p, r, and AC between the tercet groups. What would you say? i stem 1s eminenter p could be due to the circumstance that this group of students doesnt flummox the repast plan that undergrad students who live on (or close to) campus have. Additionally, some(prenominal) MBA students may have longer classes than the typical undergad student, especially on weekends. The MBA students may be more(prenominal) given up to buy more fodder to save and snack on during class sessions.The retention probability by 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 sandwich memory board. MBA students still have a high retention rate, but following the completion of their MBA program, theyre less likely to drive to Ikes for food since they commute to school (especially if they have a good sandwich shop from where they commute). Regarding AC, the cost to shape up Ikes for people familiar with the area (Group 2) is expected to be lower beca hold the Bay Area natives already have some knowledge of Ikes.The AC for Groups 1 & 3 are higher because Ikes must(prenominal) 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 either 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 plus from 2. to 7. 5.The can be done by focusing their advertising efforts aimed at students to strictly on campus efforts. peradventure they could also utilize social media for free advertising and introduce a punch card whe re afterwards a certain amount of sandwiches bought, the customer can get a free one. This would possibly overhaul 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 discharge campus.Additionally, if the retention rate for Group 1 went from . 0 to . 825 through the use of the punch tease and level off 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.