Rosewood - Cvl
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Rosewood Customer Life-Time Value MKTG 661 Sam Min
CUSTOMER LIFETIME VALUE (CLV) The present value of future cash flows from a customer relationship The CLV calculation requires this information: •Revenue per customer •Variable cost per customer (or retention cost per customer) •Acquisition cost per customer (AC) •Retention rate (r) •Interest rate (i)
CUSTOMER LIFETIME VALUE: Rosewood Case • • • • • • • • • • • •
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value Without Rosewood Branding (2003) Total number of unique guests 115,000 Average daily spend $750 Number of days average guest stays 2 Average gross margin per room 32% Average number of visits per year per guest 1.2 Average marketing expense per guest $130 Average new guest acquisition expense $150 Total number of repeat guests 19,169 Total number of multi-property stay guests 5,750 Average Guest Retention Rate 16.67%
Without Rosewood Branding t
0
1
2
3
4
5
Rev. per night
795
842.7
893.3
946.9
1003.7
Rev. per guest
1908.0
2022.5
2143.8
2272.5
2408.8
610.6
647.2
686.0
727.2
770.8
133.9
137.9
142.1
146.3
150.7
476.7
509.3
544.0
580.9
620.1
1.00
0.167
0.028
0.005
0.001
-150
476.7
84.9
15.1
2.7
0.5
1
1.08
1.17
1.26
1.36
1.47
-150
441.4
72.8
12.0
2.0
0.3
Gross profit per guest Acquisition cost
150
Marketing cost per guest Cash Flow if retained
-150
Prob. of being retained Expected Cash Flow Discount factor
NPV of Expected CF Total NPV
378.4
CUSTOMER LIFETIME VALUE: Rosewood Case • • • • • • • • • • • •
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value With Rosewood Corporate Branding Total number of unique guests 115,000 Average daily spend $750 Number of days average guest stays 2 Average gross margin per room 32% Average number of visits per year per guest 1.3 Average marketing expense per guest To be calculated Average new guest acquisition expense $150 Total number of repeat guests To be calculated Total number of multi-property stay guests To be calculated Average Guest Retention Rate To be calculated
CUSTOMER LIFETIME VALUE: Rosewood Case • • • • • • • • • • • •
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value With Rosewood Corporate Branding Total number of unique guests 115,000 Average daily spend $750 Number of days average guest stays 2 Average gross margin per room 32% Average number of visits per year per guest 1.3 (c) Average marketing expense per guest $138.70 (c,d) Average new guest acquisition expense $150 Total number of repeat guests 19,169+5,750 (c,e) Total number of multi-property stay guests 11,500 (c) Average Guest Retention Rate 22% (f)
With Rosewood Corp. Branding t
0
1
2
3
4
5
Rev. per night
795
842.7
893.3
946.9
1003.7
Rev. per guest
2067.0
2191.0
2322.5
2461.8
2609.5
661.4
701.1
743.2
787.8
835.1
142.9
147.1
151.6
156.1
160.8
518.6
554.0
591.6
631.7
674.3
1.00
0.220
0.048
0.011
0.002
-150
518.6
121.9
28.6
6.7
1.6
1
1.08
1.17
1.26
1.36
1.47
-150
480.2
104.5
22.7
4.9
1.1
Gross profit per guest Acquisition cost
150
Marketing cost per guest Cash Flow if retained
-150
Prob. of being retained Expected Cash Flow Discount factor
NPV of Expected CF Total NPV
463.4
CUSTOMER LIFETIME VALUE (CLV) The present value of future cash flows from a customer relationship The CLV calculation requires this information: •Revenue per customer •Variable cost per customer (or retention cost per customer) •Acquisition cost per customer (AC) •Retention rate (r) •Interest rate (i)
CUSTOMER LIFETIME VALUE: Rosewood Case • • • • • • • • • • • •
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value Without Rosewood Branding (2003) Total number of unique guests 115,000 Average daily spend $750 Number of days average guest stays 2 Average gross margin per room 32% Average number of visits per year per guest 1.2 Average marketing expense per guest $130 Average new guest acquisition expense $150 Total number of repeat guests 19,169 Total number of multi-property stay guests 5,750 Average Guest Retention Rate 16.67%
Without Rosewood Branding t
0
1
2
3
4
5
Rev. per night
795
842.7
893.3
946.9
1003.7
Rev. per guest
1908.0
2022.5
2143.8
2272.5
2408.8
610.6
647.2
686.0
727.2
770.8
133.9
137.9
142.1
146.3
150.7
476.7
509.3
544.0
580.9
620.1
1.00
0.167
0.028
0.005
0.001
-150
476.7
84.9
15.1
2.7
0.5
1
1.08
1.17
1.26
1.36
1.47
-150
441.4
72.8
12.0
2.0
0.3
Gross profit per guest Acquisition cost
150
Marketing cost per guest Cash Flow if retained
-150
Prob. of being retained Expected Cash Flow Discount factor
NPV of Expected CF Total NPV
378.4
CUSTOMER LIFETIME VALUE: Rosewood Case • • • • • • • • • • • •
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value With Rosewood Corporate Branding Total number of unique guests 115,000 Average daily spend $750 Number of days average guest stays 2 Average gross margin per room 32% Average number of visits per year per guest 1.3 Average marketing expense per guest To be calculated Average new guest acquisition expense $150 Total number of repeat guests To be calculated Total number of multi-property stay guests To be calculated Average Guest Retention Rate To be calculated
CUSTOMER LIFETIME VALUE: Rosewood Case • • • • • • • • • • • •
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value With Rosewood Corporate Branding Total number of unique guests 115,000 Average daily spend $750 Number of days average guest stays 2 Average gross margin per room 32% Average number of visits per year per guest 1.3 (c) Average marketing expense per guest $138.70 (c,d) Average new guest acquisition expense $150 Total number of repeat guests 19,169+5,750 (c,e) Total number of multi-property stay guests 11,500 (c) Average Guest Retention Rate 22% (f)
With Rosewood Corp. Branding t
0
1
2
3
4
5
Rev. per night
795
842.7
893.3
946.9
1003.7
Rev. per guest
2067.0
2191.0
2322.5
2461.8
2609.5
661.4
701.1
743.2
787.8
835.1
142.9
147.1
151.6
156.1
160.8
518.6
554.0
591.6
631.7
674.3
1.00
0.220
0.048
0.011
0.002
-150
518.6
121.9
28.6
6.7
1.6
1
1.08
1.17
1.26
1.36
1.47
-150
480.2
104.5
22.7
4.9
1.1
Gross profit per guest Acquisition cost
150
Marketing cost per guest Cash Flow if retained
-150
Prob. of being retained Expected Cash Flow Discount factor
NPV of Expected CF Total NPV
463.4
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