3. Brookside Tailors sells suits to three segments: Executive Custom, Signature, and Brookside One. Last year they had 6,000 Executive Custom, 15,550 Signature, and 38,200 Brookside One clients. The revenue they make annually from the three segments are as follows: $3500, $1800, and $600. The cost to serve these customers is as follows: $1000, $400, and $120, respectively. The retention rate for segments are 80%, 76%, and 85%. Assuming an annual discount rate of 5%, please calculate the following: a. CLV for each segment. What is the total value of each segment? [6] b. Suppose the company decides that it would like to invest $2,500,000 next year on loyalty programs to increase the retention rate. How much would the retention rate need to increase to for each segment if the whole sum were spent in that segment? [6] c. Instead of spending on retention, let us say they are going to spend it to acquire more of customers. If they spend that amount of money, they anticipate targeting 2,000, 5000, and 10,000 customers from Executive Custom, Signature, and Brookside One, respectively. What percentage do they have to acquire from targeted audience from each segment to breakeven? How many customers does that work out to? [6] d. Imagine that growth rates in contribution are different for each segment for this incoming cohort of customers. The growth rates are 8%, 12%, and 15% respectively. Recalculate CLV for each segment. What is the total value of each segment? [6]
Brookside Tailors sells suits to three segments: Executive Custom, Signature, and Brookside One. Last year they had 6,000 Executive Custom, 15,550 Signature, and 38,200 Brookside One clients. The revenue they make annually from the three segments are as follows: $3500,$1800, and $600. The cost to serve these customers is as follows: $1000,$400, and $120, respectively. The retention rate for segments are 80%,76%, and 85%. Assuming an annual discount rate of 5%, please calculate the following: a. CLV for each segment. What is the total value of each segment? [6] b. Suppose the company decides that it would like to invest $2,500,000 next year on loyalty programs to increase the retention rate. How much would the retention rate need to increase to for each segment if the whole sum were spent in that segment? [6] c. Instead of spending on retention, let us say they are going to spend it to acquire more of customers. If they spend that amount of money, they anticipate targeting 2,000, 5000, and 10,000 customers from Executive Custom, Signature, and Brookside One, respectively. What percentage do they have to acquire from targeted audience from each segment to breakeven? How many customers does that work out to? [6] d. Imagine that growth rates in contribution are different for each segment for this incoming cohort of customers. The growth rates are 8%,12%, and 15% respectively. Recalculate CLV for each segment. What is the total value of each segment? [6]
![3. Brookside Tailors sells suits to three segments: Executive
Custom, Signature, and Brookside One. Last year they had
6,000 Executive Custom, 15,550 Signature, and 38,200
Brookside One clients. The revenue they make annually
from the three segments are as follows: $3500, $1800, and
$600. The cost to serve these customers is as follows:
$1000, $400, and $120, respectively. The retention rate for
segments are 80%, 76%, and 85%. Assuming an annual
discount rate of 5%, please calculate the following:
a. CLV for each segment. What is the total value of each
segment? [6]
b. Suppose the company decides that it would like to
invest $2,500,000 next year on loyalty programs to
increase the retention rate. How much would the
retention rate need to increase to for each segment if
the whole sum were spent in that segment? [6]
c. Instead of spending on retention, let us say they are
going to spend it to acquire more of customers. If they
spend that amount of money, they anticipate targeting
2,000, 5000, and 10,000 customers from Executive
Custom, Signature, and Brookside One, respectively.
What percentage do they have to acquire from targeted
audience from each segment to breakeven? How many
customers does that work out to? [6]
d. Imagine that growth rates in contribution are different
for each segment for this incoming cohort of
customers. The growth rates are 8%, 12%, and 15%
respectively. Recalculate CLV for each segment. What
is the total value of each segment? [6]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5179f629-fb36-4be8-aa66-bb9f7482803c%2F7701dd9c-5934-4624-b5a4-0048d9020136%2Fgrq67ea_processed.jpeg&w=3840&q=75)
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