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Maru Batting Center:

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on 11 December 2015

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Transcript of Maru Batting Center:

Maru Batting Center:
Customer Lifetime Value

Q2 Break Even - Vicky
How soon will MBC break even on the following customers?
Q3 - Meng
Taking into account the time value of money and assuming that 100 percent of a customer segment will have experienced attrition once the net present value of annual profits per customer falls below ¥100, what is the lifetime value to MBC of the following customers?
Assume that a customer’s lifetime extends up to and including the year in which the net present value of annual profits falls below ¥100.
Q1. Customer Acquisition Cost - Vicky
Q5 - Luiz
MBC is now considering to sponsor another ward: Chiyoda ward instead of the Minato ward. If MBC changed to sponsor Chiyoda ward, the condition would be:
contact cost: ¥1000 to ¥600 (AC: ¥10,000 to ¥7,500)
response rate: 10% to 8%
retention rate: 75% to 65%
number of members:
Double

Should MBC change?
Q4 - Meng
Which is the most attractive customer segment for MBC to target?
Choose: An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala event (Party)
Reasons:
a) The customers lifetime last longer than other plans
b) We can earn more money from this segment
Q2 a. A Little Leaguer
Q2 b. A Summer Slugger
Q2 c. An Elite Ballplayer (Print Ad)
Q2 d. An Elite Ballplayer (Party)
Q2 e. An Entertainment Seeker
Q3 a. A Little Leaguer
Q3 b. A Summer Slugger
Q3 c. An Elite Ballplayer (Print Ad)
Q3 d. An Elite Ballplayer (Party)
Q3 e. An Entertainment Seeker
Q6 - Avril
Bonus Challenge - Sheryl
Q1
Changes
Results
Changes
Result - Print Ad
Result - Party
Changes
Result
Group 3
Meng Chen (Miki)
Yarong Wang (Vicky)

Shijing Zhang (Avril)
Xiyue Liu (Sheryl)
Zhengkun Tang (Luiz)

Maru ignored her brother's suggestion and chose to target the Elite Ballplayers segment (party)
Increase the one time baseball bat giveaway cost
¥0 to ¥10,000
Increase the launch party's response rate
25% to 29%
Remain retention rate
75% to 60%
What is the Customer Acquisition Cost to Maru Batting Center for the following customers?

Cost to Contact
Response Rate
Customer Acquisition Cost =
NO
Maru's brother suggested she focus on Elite Ballplayers segment, targeting it by offering a ¥500 discount on all future purchases to Elite Ballplayers who purchase at least 20 batting cage hours in Year1.

Decrease the amount MBC can bill Elite Ballplayers from ¥7,500 to ¥70,00 per hour from Year2 onward

Increase the retention rate from 70% to 75%

Should MBC offer this promotion?
In order to break even, the cumulative profit has to be positive.
Without discounting cash flows to take into account the time value of money
Assume that revenues and variable costs to staff the cages occur on an ongoing basis but that the aquisition costs are a one-time event
Full transcript