The Harvard Business School offers up this downloadable interactive workbook, which is designed to help estimate the cost of acquiring a customer and the Net Present Value (NPV) of that customer’s business during his or her useful economic life. The simple model is programmed to evaluate a single product offering. The more complex model allows you to incorporate multiple products with distinct customer loyalty and repurchase characteristics. The models take into account the monies spent on customer acquisition to arrive at their conclusions. In the complex model, you can assign a specific economic life to a customer, set multiple retention rates for different years, and look at the value of a customer for a company with multiple products. The calculation page then separates the profitability of the customer on an annual basis and by product as well as breaking up customer present value by product. [WDFM Annotation]
Authors: Chad Ellis, Jon B. DeFriese
Source: Harvard Business School (HBS) Working Knowledge
Subjects: Free Stuff / Tools, Marketing / Sales
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