Industry CLV Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8

[Traditional and known data] 1 2 3 4 5 6 7 8

Annual Gross Revenue [@ $52 pm] 624 624 624 624 624 624 624 624
Survival Rate (Equivalent to retention) 1.00 0.76 0.58 0.44 0.33 0.25 0.19 0.15
Cost of Serving the customer [@ $30 pm] 360 360 360 360 360 360 360 360
Total expected Profit / customer 264.00 200.64 152.49 115.89 88.08 66.94 50.87 38.66
Discounting rate [Interest Rate = 5%] 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
Present value of cash flow 251.43 181.99 131.72 95.34 69.01 49.95 36.15 26.17
Acquisition cost 370
Cumulative profit net Acq. Cost -118.57 63.41 195.14 290.48 359.49 409.44 445.60 471.76
Price in cents / Minute 25.00 Number of minutes of usage 200.00 ARPU
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8
Virgin CLV
1 2 3 4 5 6 7 8
Annual Gross Margin [12 x monthly ARPU] 600 600 600 600 600 600 600 600
Survival Rate (Equivalent to retention) 1.00 0.28 0.08 0.02 0.01 0.00 0.00 0.00
Cost of Serving the customer 270 270 270 270 270 270 270 270
Total expected Profit / customer 330.00 92.40 25.87 7.24 2.03 0.57 0.16 0.04
Discounting rate 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
Present value of cash flow 314.29 83.81 22.35 5.96 1.59 0.42 0.11 0.03
Acquisition cost 120
Cumulative profit net Acq. Cost 194.29 278.10 300.44 306.40 307.99 308.42 308.53 308.56

307.99 5 6 7 8 10 15 20
Price in cents / minute vs. Churn Rate Data
Tables 0.02
0.03
CLV for 5 Years 0.04
CLV for 10 years 0.05
Table below shows CLV20 minus CLV10 0.06
 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20
9 10 11 12 13 14 15 16 17 18 19 20
624 624 624 624 624 624 624 624 624 624 624 624
0.11 0.08 0.06 0.05 0.04 0.03 0.02 0.02 0.01 0.01 0.01 0.01
360 360 360 360 360 360 360 360 360 360 360 360
29.38 22.33 16.97 12.90 9.80 7.45 5.66 4.30 3.27 2.49 1.89 1.44
0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
18.94 13.71 9.92 7.18 5.20 3.76 2.72 1.97 1.43 1.03 0.75 0.54

490.71 504.42 514.34 521.52 526.72 530.48 533.21 535.18 536.61 537.64 538.39 538.93
50.00 %age cost to serve 0.45 Industry Churn rate / month 0.06
Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20
9 10 11 12 13 14 15 16 17 18 19 20
600 600 600 600 600 600 600 600 600 600 600 600
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
270 270 270 270 270 270 270 270 270 270 270 270
0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

308.57 308.57 308.57 308.57 308.57 308.57 308.57 308.57 308.57 308.57 308.57 308.57

25.00 30 308.57 5 6 7 8 10 15 20 25.00 30

0.02
0.03
0.04
0.05
0.06

36 #VALUE! #VALUE! ### #VALUE! #VALUE! ### 181 #VALUE!

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Price CLV(.06) CLV(.02)
5 -34 62
6
7
-17
0
99
135 CLV
1100
8
10
17
51
172
245 1000
As a function of Price
15 137 427 900
20 222 609
25 308 792 800
30 394 974 700
600
500
400
300
Explained 200
in the PPT 100
0
-100 5 6 7 8 1

CLV(.06)
 CLV
ction of Price and Contract

792

308

7 8 10 15 20 25 30

CLV(.06) CLV(.02)
Churn CLV Y5 CLV Y10
0.02 792 973

CLV
0.03 617 679
1000 1; 973
0.04 484 502
0.05 384 388
0.06 308 308 900

1; 792
800

700
2; 6

600 2; 617
Explained in
the PPT 500

400

300
0.01 0.02 0.0

CLV
1; 973
Containing Churn
to Grow CLV
1; 792

2; 679

2; 617
3; 502
3; 484

4; 388
4; 384
5; 308
5; 308
0.02 0.03 0.04 0.05 0.06

CLV Y5 CLV Y10 Churn Rate

Price CLV(.06)
5 -34
6 -17 CLV
7
8
0
17 600 As a function of Price 565
9 34
10 51 500 480
15 137
20 222 394
400
25 308
308
30 394
300
35 480
222
40 565
200
137

100
51
34
17
0
0 -34 -17

-100
5 6 7 8 9 10 15 20 25 30 35 40
 565

480

394 Explained in
the PPT

30 35 40