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ablikids3
ablikids3
23.06.2021 • 
Business

Family Tree has undergone some changes since you last saw them. FamilyTree.com is a subscription-based website that allows consumers to conduct genealogical research. There are three levels of subscriptions, Basic, Premier and Ultra. The company still spends approximately $4 per customer on acquisition marketing, but they have raised their prices across all of the membership levels based on a prior CLV analysis. Their retention rates have also changed as they now spend approximately $2 per year, per customer, to retain their customers, and no longer offer customers receive their first month as a free trial. Monthly prices, variable costs and retention rates are provided below. Membership Level Monthly price Variable cost Monthly retention rate
Basic $5.99 $1.50 75%
Premier $6.99 $1.75 45%
Ultra $7.99 $2.50 55%

Required:
a. Calculate the customer lifetime value for a NEW customer at each level of membership, using a monthly discount rate of .01.
b. Based on these numbers, what are your recommendations regarding the marketing of the various membership levels?

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