Calculating Customer Lifetime Value (CLV) - Quiz

1. Retention costs in CLV calculation typically include:

Internal employee costs only

Competitor analysis costs

Loyalty programs and service expenses

Customer acquisition activities

2. Which factor directly increases CLV?

Higher churn rates

Higher retention rates

Higher acquisition costs

Lower customer margins

3. Which component is NOT typically considered when calculating CLV?

Competitor’s market share

Retention rate

Acquisition cost

Discount rate

4. The formula for simplified Customer Lifetime Value is:

Margin × (Retention rate / [1 + Discount rate – Retention rate])

Margin × Retention rate

Retention rate – Acquisition cost

Margin × Acquisition cost

5. Reducing acquisition costs directly:

Decreases CLV

Increases CLV

Has no impact on CLV

Reduces retention rates

6. CLV decreases when:

Retention rates improve

Acquisition costs rise without improved retention

Customers make repeat purchases

Customers buy premium products

7. What does Customer Lifetime Value (CLV) primarily measure?

Immediate sales revenue

The value of customer satisfaction

Long-term profitability of a customer

Short-term profitability

8. If annual margin per customer is $100 and retention rate is 80%, increasing retention rate will:

Not affect CLV

Decrease CLV

Increase CLV

Reduce acquisition costs

9. Negative Customer Lifetime Value means:

Customer generates losses over time

Customer generates profits immediately

Lower discount rates

High long-term customer retention

10. Retention rate in CLV calculation indicates:

Percentage of customers retained each year

Cost of retaining customers

Percentage of new customers

Immediate revenue from a customer

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