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# Northern Aero Data (Clv) Case Analysis

928 words - 4 pages

Question 1
1) The lifetime value of a typical customer in each segment when the discount rate is 15%.
* Exhibit 1 shows that the customer lifetime value for each segment with a 15% discount rate.
* The lifetime value of a typical customer in the platinum( top 20%) segment is worth \$3496.
* The lifetime value of a typical customer in the platinum( low 80%) segment is worth \$2394.
* The lifetime value of a typical customer in the gold ( top 20%) segment is worth \$1415.
* The lifetime value of a typical customer in the gold ( low 80%) segment is worth \$769.
* The lifetime value of a typical customer in the Silver( top 20%) segment is worth \$406.
* The ...view middle of the document...

* The lifetime value of a typical customer in the gold ( low 80%) segment is worth \$500.
* The lifetime value of a typical customer in the Silver( top 20%) segment is worth \$248.
* The lifetime value of a typical customer in the Sliver( low 80%) segment is worth \$86.
* The lifetime value of a typical customer in the inactive customers segment is worth \$23.
* The lifetime value of a typical customer in the low customers segment is worth \$0.
*
* If the existing customers were to be economically valued, as an asset of the company, how much would they be worth?
* The economic value of the existing customers can be calculated by multiplying the customer lifetime value of each segment by the segment’s size and then summing the value of all segments.
* Total value, in today’s dollars, of the existing customer database will be \$9,415,807. ( Shown in the Exhibit 4)
*
* What key differences does it make? Please explain.
* In the Exhibit 5, I use the 20-period projection and calculate the difference.
* When the discount rate increases from 15% to 40%, the company faces a 37.3% drop in its total value. The loss will be \$5,609,132. the largest difference rate comes from the silver segment. Firstly, the silver segment has the most significant amount of customers. The requirement of being a silver customer is small ( fly with the Northern Aero at least one time). Secondly, each year some of the customers will degrade from the platinum or gold segment to the silver segment. Due to the largest number of customers in the silver segment, the company will encounter the huge loss when it adjust the discount rate from 15% to 40%.
* Based on the data in the Exhibit 5, we could find that the most loyalty customers come from the platinum segment. If the company wants to increase its total value, it probably should utilize its limited budget to keep customers in the Silver segment,...

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