CCT224H5 Lecture Notes - Lecture 8: Customer Retention, Churn Rate, SpotifyPremium
by Hao Liu
2 pages82 viewsFall 2017
DepartmentCommunication, Culture and Technology
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Week 8 – Customers
What are customers?
• Customer is an individual or business that purchases the goods or services
produced by a business
• Attracting customers is the primary goal of most public-facing businesses,
because it is the customer who creates demand for goods and services
Customer Lifetime Value (CLV)
• The monetization you receive from a customer over the time they shop with you
• Rewards systems
o Starbucks app
o 7/11 app
o Cineplex (Scene member rewards)
Customer Cost of Acquisition
• Disruption (reduced product cost)
• Marketing (specifically targeting new customers)
• Multiple product lines (R&D, etc)
• Providing a unique range of customer services to personalize service and
customize products to meet differing needs
3 important questions for Software as a Service (SaaS)
• How much do paying customers spend throughout their lifecycle?
o (Revenue per paying user per month * gross margin) / churn
o What is churn rate?
▪ Rate of attrition
▪ % of subscribers of a service who discontinue their subscriptions to
that service within a given time period
▪ For a company to expand tis clientele, its growth rate, as measured
by the number of new customers, must exceed its churn rate
▪ Generally expressed as a percentage
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