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ID: 352974 • Letter: H
Question
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State in your own words, your understanding of the objective of the analysis which is the case study for the LTV. Note: The objective is stated on slide 3 of the LTV powerpoint. In your own words what was the client organization looking to accomplish with the analysis.
The decay function as described in the case study measures what? Identify the term if you can, and in addition explain what it is.
The decay function as described in the case study measures what? Identify the term if you can, and in addition explain what it is.
Explanation / Answer
The company was trying to find an upper limit for the money that could spend on acquiring a single customer in the home entertainment business. This could be done by having a method to calculate the life time value of a customer which is nothing but the revenue that one can expect from a customer from acquisition to severance with the product or brand.
The decay function as described in the case study measures the life time value of a customer. It is the total value that the customer provides in terms of dollars as long as he has a relationship with the company.
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