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Title: customer lifetime value analysis

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Subject: Business
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Date: May 8, 2002
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Length: 3 / 748
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A referral reward system may be used to incentivise these customers to try and rope in more customers. Customers Whose Initial Purchase is < $50: From the table in Q1 we see that even after a 5-year period, customers in this category still do not produce a profit for Tuscan...

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We see from Exhibit 1 of the case that from year 2 onwards the response rate of customers in this category falls rapidly. Also noted is the fact that the number of buyers who purchase only 1 item compared to the other category. This seems to indicate that customers in this category are only trying out the catalog service as a fad or one time thing and do not see any incentive to re-order...

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