Calculating Customer Lifetime Value (CLV) - Quiz

1. Annual customer margin in CLV calculation is:

Revenue minus retention costs per customer

Acquisition costs plus revenue

Total marketing expenses per customer

Revenue minus acquisition cost

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

Decrease CLV

Reduce acquisition costs

Increase CLV

Not affect CLV

3. CLV primarily helps marketers:

Increase immediate sales only

Target profitable customers effectively

Reduce customer service efforts

Ignore customer complaints

4. Which of these would increase Customer Lifetime Value?

Improving customer satisfaction

Increased marketing costs without retention

Decreasing retention rate

Frequent price promotions only

5. Higher customer retention rates generally result in:

Higher CLV

Lower CLV

No change in CLV

Higher acquisition costs

6. Acquisition costs in CLV calculations are:

Added to customer profits

Multiplied by retention rate

Ignored completely

Subtracted from total customer profits

7. The primary reason companies calculate CLV is to:

Eliminate customer complaints

Increase short-term transactions

Allocate resources to profitable customers

Minimize product innovation

8. Retention costs in CLV calculation typically include:

Internal employee costs only

Loyalty programs and service expenses

Customer acquisition activities

Competitor analysis costs

9. Retention rate in CLV calculation indicates:

Cost of retaining customers

Immediate revenue from a customer

Percentage of customers retained each year

Percentage of new customers

10. Reducing acquisition costs directly:

Reduces retention rates

Increases CLV

Decreases CLV

Has no impact on CLV

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