Customer Lifetime Value Metric
Read the scenario below, then use the table to calculate customer lifetime value.
Bilberry Beverages, Inc. is a newly acquired Riordan Manufacturing customer. Bilberry offers four flavors of berry soda. Each flavor requires its own bottle. Bilberry needs six pallets per month for each flavor. Pallets hold 700 bottles. Each bottle costs Riordan 18¢ to produce and label. Bilberry pays 38¢ per bottle, including shipping. Riordan absorbs the shipping cost, which is $12 per pallet.
The average contractor remains a loyal customer of Riordan Manufacturing for 7 years and losses account for only 4% of total sales over the average lifetime of these relationships.
Using these averages, and the figures provided in the scenario, calculate customer lifetime value for Riordan’s relationship with Bilberry Beverages, Inc.