MKT 300 Chapter 5: MKT300-Chapter5

• School: Ryerson University
• Department: Marketing
• Course: MKT 300
• Professor: Armand Gervais

Document Summary

Customer profit (cp): the profit the firm makes from serving a customer or customer group over a specified period of time. It is important to a firm so they know which customer relationships are profitable and which are unprofitable. In the case where they are unprofitable, they should not target these customers anymore. In the case where the relationship is profitable, the firm should take steps to ensure they continue the relationship. Customer profitability: the difference between the revenue earned from and the costs associated with the customer relationship during a specified time: we should treat dissimilar customer differently: Customer lifetime value: the dollar value of a customer relationship based on the present value of the projected future cash flows from the customer relationship. Customer lifetime value ($) = {margin ($) x [retention rate (%) / (1 + discount. Rate (%) retention rate (%))} acquisition costs.