Hey Geoff, thank you for this video. What's the difference between the average profit contribution and the average profit contribution of retained customers only? Aren't they the same thing since that the average profit contribution calculation is derived from average customer revenue of customers who are retained?
Average profit contribution is the profit from customers that we retain. In the first year our profit is an average of $250/customer growing through cross-selling to $475/customer by year 10. However, the next line is % of retained customers - this is a probability estimate of holding a customer. My next line (which could be relabeled for clarity) is the profit per retained customer X probability of holding the customer. This reduces to $36 per year 10. This is the profit from existing customers, based on future relationships (profit and likelihood to hold).
Thanks for the tutorial it was very helpful!
Hey Geoff, thank you for this video. What's the difference between the average profit contribution and the average profit contribution of retained customers only? Aren't they the same thing since that the average profit contribution calculation is derived from average customer revenue of customers who are retained?
Average profit contribution is the profit from customers that we retain. In the first year our profit is an average of $250/customer growing through cross-selling to $475/customer by year 10. However, the next line is % of retained customers - this is a probability estimate of holding a customer. My next line (which could be relabeled for clarity) is the profit per retained customer X probability of holding the customer. This reduces to $36 per year 10. This is the profit from existing customers, based on future relationships (profit and likelihood to hold).
your video is not working, can't see the spreadsheet
It should be working - can you please recheck?
@@MarketingStudyGuide its still not working