The club charges a membership fee of $35 per year. The membership entitles Georg

Question

The club charges a membership fee of $35 per year. The membership entitles George join 6 hikes a year, which he utilizes to the maximum. During a hike, he usually buys some hiking equipment and a sports drink from the club. On average, he spends $60 during each hike with the club and the cost of providing the required products runs to about $40 for the club. The club has a zero discount rate and loses about 30% of its customers a year.

Answer the questions sequentially, and keep adding the new information given in each
question to the next one.

1. What is George’s CLV for the club?

2. As part of the promotion to get new members, the club conducted a free hike and provided food, drinks, and equipment. The free hike attracted 10 hikers (one of which is George) and cost the club $250 to conduct. They also send her flyers and mails that cost $6 a year. With these costs added in, what is her new CLV?

3. During a hike,George meets the CEO of the club, and mentions to him that zero discount rates are not reasonable, and that the market discount rate is about 10%. Assuming the same costs described above, what is the CLV that the CEO should assign to George? (Assume the same costs are same as that given in question 2.)

4. After sharing this information,George is so lost in thinking about CLV that she slips and falls down during a difficult turn, which the hiking guide didn’t warn him about. She is very upset and tells the club that he is leaving unless he is compensated. What is the maximum amount the club should be willing to pay out to retain George? (Assume the same costs and interest rate are same as that given in questions 2 and 3.)

Explanation / Answer

1.George opened its gate in 2001,a private member;s club where environment and shape are silently comtemporary and consciously understand.An extensive combination oF David sign hang in the brasserie living roomin which there was open kitchen gives a sense of cinema for food.

2. $ 400 is her new CLV.

3. $ 200 is the CLV that the CEO should assign to George.

4.The maximum amount the club should be willing to pay out to retain George is $ 800.

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