Question

Chick-fil-A restaurants want to find out the lifetime value of their satisfied and highly satisfied consumers. A satisfied consumer visits Chick-fil-A 3 times a month and spends $9 each time. On average this type of consumer purchases products from Chick-fil-A for 4 years. A highly satisfied consumer visits Chick-fil-A 5 times a month and spends $12 during each visit. On average a highly satisfied consumer purchases products from Chick-fil-A for 8 years. Calculate the lifetime value of (i) a satisfied consumer; and (ii) a highly satisfied consumer (show your work step by step). What is the implication of this lifetime value calculation

Answer 1

Based on the number of visits to Chick-fil-A and the amount spent per visit, the following are true:

• Lifetime value for satisfied customer = $1,296
• Lifetime value for highly satisfied customer = $5,760

What is the lifetime value for satisfied customers?

This can be found as:

= No. of visits per year x Number of years customer will purchase from Chick-fil-A x Amount spent per visit

= (3 visits per month x 12 months) x 4 years x 9

= $1,296

What is the lifetime value for Highly satisfied customers?

= No. of visits per year x Number of years customer will purchase from Chick-fil-A x Amount spent per visit

= 5 times a month x 12 months x 8 years x 12

= $5,760

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