S.No. Ch. No. Group No.

Metric Name

1 27MMD Return on Customer

3 28MMD New Customer Gains

Customer Acquisition Costs

4 29MMD

Cost per Lead

5 30MMD

6 31MMD Retention Rate

7 32MMD Churn Rate

3
8 33MMD 3 Customer Loss

9 34MMD Consumer Franchise

10 35MMD Customer Lifetime Value

11 36MMF Customer Brand Value

12 5MMF Recency

13 5MMF Customer Profit

14 5MMF Prospect Lifetime Value

15 5MMF Average Acquisition Cost

16 5MMF Average Retention Cost

Formula
RoC = (πᵢ + ΔCEᵢ)/CEᵢ₋₁
Where,
πᵢ = Cash flow from customers during period i; ΔCEᵢ = Change
in customer equity during period i;
CEᵢ₋₁ = customer equity at the beginning of period i.

Customer Gain = Cet- Cbt

Where,
Cet = the number of customers at end of time period t
Cbt = the number of customers at beginning of time period t

Cac = M * C where Cac = customer acquisition costs; M =

number of mailers needed to acquire one customer; C = cost
to send each mailer

CPL= TAC/ TLG where TAC = total advertisement costs;

TLG = total leads generated;
TAC = Direct advertisements costs + indirect advertisements
costs

Retention Rate = Ca / Cat where Ca = the number of active

customers at end of time period t
Cat = the number of active customers at start of time period t

Churn Rate = Ct / Cat

Where
Ct = the number of customers a business loses over time
period t
Cat = the number of active customers at the start of time
period
Customer Loss = Cbt - Cet
Where
Cbt = the number of active customers at beginning of time
period t
Cet = the number of active customers at end of time period t

Sales = (P1 * N1) + (P2 * N2)

where
P1 = customer probability of buying if committed
N1 = number of committed buyers
P2 = customer probability of buying if uncommitted
N2 = number of uncommitted buyers

CLTV = [(M - C) * (P * Y) - A + (A * N)] * F

where
M = average amount of money spent per purchase
C = average costs to service each purchase
P = number of purchases per year
Y = number of years managers expect to keep this customer
A = new-customer acquisition cost
N = number of new customers referred by original customer
F = customer adjustment factor for the period of time being
evaluated

CBV = P * BR * SOP * M
where: P = penetration i.e % of brand users v/s overall users
in the category
BR= buying rate i.e. avg units bought per customer during
time t
SOP= share of purchase i.e. % of brand purchasers among its
customer v/s competitors
M = gross contribution margin

Customer Profit = Revenue from the customer - cost to serve

each customer
PLV = Acquisition Rate * [Initial Margin + CLV] - Acquisition
spending

Average Acquisition Cost = Acquisition spending / number of

customers acquired
Average Retention Cost = Retention Spending / Number of
customers retained
Brief Description

ROC equals a firm’s current-period cash flow from its customers plus
any changes in the underlying customer equity, divided by the total
customer equity at the beginning of the period.”

New customer gain provides marketers with a basic gauge of a new

product’s acceptance in the market. Customer gain can also be used
to judge whether new strategies are needed to increase market share
for an existing line of products. With the help of Ansoff’s matrix,
marketers need to measure the success of their new new consumer’s
efforts.

With growth as a key marketing objective and STP (segmentation,

targeting, and positioning) as an important strategic marketing tool,
marketers have to determine the cost of reaching, attracting, and
ultimately acquiring the customers they are targeting.
To know the cost required to acquire the customer, there are two
methods one involving the conversion rates as well as the marketing
vehicle and the other uses the frequency of marketing vehicle
required to acquire a customer only.

Cost per lead tells marketers the rough costs of each lead and
whether the lead will turn out to be a profitable customer, but to
increase accuracy, a marketer must factor in both the direct and
indirect costs. Furthermore, the ROI should be calculated to
determine whether the proposed campaign yields positive results.

Marketers should thrive to attract customers not only in initial stages

but throughout the span of business to maintain a healthy financial
performance. However, this metric is important important because
retaining is less expensive then prospecting.

Churn rate measures the customer attrition. it measures the

percentage of customers that a business has lost over a period of
time.
Customer loss is an effective tool for assessing the continued value of
an existing product to customers as it matures over time. A negative
customer loss over a significant amount of time signals decline in level
of trust customers have on the product and that the product is no
longer relevant.

The consumer franchise is a valuable measure to help marketers

understand how to use the marketing levers at their disposal to
increase sales profitability and effectiveness for the business.

Customer lifetime value (CLV) is a metric that represents the total net
profit a company makes from any given customer. CLV is a projection
to estimate a customer's monetary worth to a business after factoring
in the value of the relationship with a customer over time.

This helps in measuring the approximate value of each customer to

the brand.

The length of time since a customer's last purchase

Customer Profit is the profit the firm makes from serving a customer
or customer group over a specified period of time. Customer
Profitability if the difference between the revenues earned from and
the costs associated with the customer relationship during a specified
period.
PLV is used to account for the lifetime value of a newly acquired
customer (CLV) when making prospecting decisions.

The firm's average acquistion cost is the ratio of acquisition spending

to the number of customers acquired.
The firm's average acquistion cost is the ratio of retention spending to
the number of customers successfully retained.
Return on Cutomers
ROC equals a firm’s current-period cash flow from its customers plus any changes in the underlying custom
Description Rogers twist on a normal return on investment (ROI) analysis to help companies quantify the returns from
customers plus any changes in the underlying customer equity, divided by the total customer equity at the

It is represented by formula: RoC = (πᵢ + ΔCEᵢ)/CEᵢ₋₁

Where,
πᵢ = Cash flow from customers during period i; ΔCEᵢ = Change in customer equity during period i;
CEᵢ₋₁ = customer equity at the beginning of period i.
Q. INC ARTS CO. cash flow from the customers for year 2016 was $50500. the change in customer equity
of the company.

Solution CET CET-1 π

2500 3200 50,500

ROC 16.5625 %
es in the underlying customer equity, divided by the total customer equity at the beginning of the period . It is a Peppers &
s quantify the returns from various marketing and CRM initiatives.ROC equals a firm’s current-period cash flow from its
otal customer equity at the beginning of the period .

r equity during period i;

e change in customer equity for 2016 was 2500 by the end. The customer equity in the beginning was 3200. what is ROC
 is a Peppers &
ow from its

0. what is ROC
New Customer Gains
New customer gain provides marketers with a basic gauge of a new product’s acceptance in t
Description needed to increase market share for an existing line of products. With the help of Ansoff’s ma
It is represented by formula:
Cet- Cbt
where
Cet = the number of customers at end of time period t
Cbt = the number of customers at beginning of time period t

Q. SOFTBANK CO. had 125,000 customers in Jan 2017. however the number increased to 19

Solution
CET CBT
198550 125000
CUSTOMER GAIN 73550
w product’s acceptance in the market. Customer gain can also be used to judge whether new strategies are
With the help of Ansoff’s matrix, marketers need to measure the success of their new new consumer’s efforts.

he number increased to 198550 by the end of 2017. What is the customer gain ?
egies are
er’s efforts.
Customer Acquisition Costs

Description With growth as a key marketing objective and STP (segmentation, targeting, and positioning) as an
reaching, attracting, and ultimately acquiring the customers they are targeting.
It is represented by the formula: Cac = M * C
Where,
Cac = customer acquisition costs;
M = number of mailers needed to acquire one customer;
C = cost to send each mailer

Q. The cost of each mailer is $0.78. number of mailers required to acquire one customer is 125. what is t

Solution M
125

CAC 97.5

VVR=0.696/0.528=1.318 or
131.8%

$12868,000,000/$18,493,000,000= 0.

$68,735,000,000/$130,218,000,000 =
ting, and positioning) as an important strategic marketing tool, marketers have to determine the cost of
geting.

e customer is 125. what is the CAC of the company ?

C
0.78

6/0.528=1.318 or

00,000/$18,493,000,000= 0.696

00,000/$130,218,000,000 = 0.528
ost of
Cost per Lead

Description Cost per lead tells marketers the rough costs of each lead and whether the lead will turn out t
direct and indirect costs. Furthermore, the ROI should be calculated to determine whether th
It is represented by the Formula: CPL= TAC/ TLG
Where,
TAC = total advertisement costs;
TLG = total leads generated;
TAC = Direct advertisements costs + indirect advertisements costs

Q. KILLER CORP. incurred the advertisement cost of $5,50 on a campaign. The cost incurred to create
total number of leads generated were 112.

Solution
AC DC AF
$550 $75 $120

cost per lead = $626.07

each lead and whether the lead will turn out to be a profitable customer, but to increase accuracy, a marketer must factor in bo
should be calculated to determine whether the proposed campaign yields positive results.

ements costs

$5,50 on a campaign. The cost incurred to create the campaign was $75. the agency costs rounded to $120. What is the TAC of the camp
marketer must factor in both the

What is the TAC of the campaign ? The

 Retention Rate
Marketers should thrive to attract customers not only in initial stages but throughout the span of business t
Description retaining is less expensive then prospecting.

Retention Rate = Ca / Cat

where Ca = the number of active customers at end of time period t
Cat = the number of active customers at start of time period t

Q. LETS SAY THAT THE AVERAGE LIFE SPAN OF THE CONSUMER IS 10 YEARS FOR COMPANY ABC. WHAT W

Examples N ( in years)
10
CUSTOMER RETE 90%
ughout the span of business to maintain a healthy financial performance. However, this metric is important important because

FOR COMPANY ABC. WHAT WHILL BE THE RETENTION RATE OF DURING THE TIME PERIOD.
ortant because
 Churn Rate
Churn rate measures the customer attrition. it measures the percentage of customers that a business has
Description It is represented as follows:
Churn Rate = Ct / Cat
Where
Ct = the number of customers a business loses over time period t
Cat = the number of active customers at the start of time period

Q. TESCO CORP. had 54,988 lost customers by december 2017. active customers during that year were 6

Solution
CT CAT
54,988 64,522

CHURN RATE 85.22%

customers that a business has lost over a period of time.

omers during that year were 64522. What is the churn rate of the company at the end of the year ?
 Customer Loss

Description Customer loss is an effective tool for assessing the continued value of an existing product to customers a
signals decline in level of trust customers have on the product and that the product is no longer relevant

Customer Loss = Cbt - Cet

Where
Cbt = the number of active customers at beginning of time period t
Cet = the number of active customers at end of time period tCustomer Loss = C bt - Cet

Q. SOFTBANK CO. had 150,000 customers in Jan 2015. however the number reduced to 98550

Solution Cbt Cet

150,000 98550

Customer L 51,450
existing product to customers as it matures over time. A negative customer loss over a significant amount of time
he product is no longer relevant.

ss = C bt - Cet

he number reduced to 98550 by the end of 2015. What is the customer loss ?
 Consumer Franchise
The consumer franchise is a valuable measure to help marketers understand how to us
Description for the business.
Sales = (P1 * N1) + (P2 * N2)
where
P1 = customer probability of buying if committed
N1 = number of committed buyers
P2 = customer probability of buying if uncommitted
N2 = number of uncommitted buyers

Q. HPL has 2000 committed buyers for its new product. Company held their opening o
the product. number of uncommitted buyers were 200. Committed customers proba

Solution
s understand how to use the marketing levers at their disposal to increase sales profitability and effectiveness

any held their opening of first outlet previous month. the probability that 45% uncommitted buyers bought
mitted customers probability of buying is 100%. what is the CF/sales of the company ?
ectiveness

rs bought
 Customer Lifetime Value
Customer lifetime value (CLV) is a metric that represents the total net profit a company makes from any
Description after factoring in the value of the relationship with a customer over time. It is represented by the follow
where
M = average amount of money spent per purchase
C = average costs to service each purchase
P = number of purchases per year
Y = number of years managers expect to keep this customer
A = new-customer acquisition cost
N = number of new customers referred by original customer
F = customer adjustment factor for the period of time being evaluated

Solution
M C P Y A N
220 70 3 20 225 5

CLTV $ 12,870.00
rofit a company makes from any given customer. CLV is a projection to estimate a customer's monetary worth to a business
e. It is represented by the following formula: CLTV = [(M - C) * (P * Y) - A + (A * N)] * F

F
1.3
h to a business
 Consumer Brand Value

Description This helps in measuring the approximate value of each customer to the brand . It is represented by the
where: P = penetration i.e % of brand users v/s overall users in the category
BR= buying rate i.e. avg units bought per customer during time t
SOP= share of purchase i.e. % of brand purchasers among its customer v/s competitors
M = gross contribution margin

Q. Software app provider has the following data on products used on smartphones : P= 0.12 B

Solution
Customer brand 0.0072 %
e brand . It is represented by the formula: CBV = P * BR * SOP * M
he category

tomer v/s competitors

sed on smartphones : P= 0.12 BR = 4 SOP = 2.5 % GCM= 60 %

 Recency

Description The length of time since a customer's last purchase.

Q. Software app provider has the following data on products used on smartphones : P= 0.12 B

Solution
Customer brand 0.0072 %
sed on smartphones : P= 0.12 BR = 4 SOP = 2.5 % GCM= 60 %
 Customer Profit

Description Customer Profit is the profit the firm makes from serving a customer or customer group over a specified
and the costs associated with the customer relationship during a specified period.

Customer Profit = Revenue from the customer - cost to serve each customer
r customer group over a specified period of time. Customer Profitability if the difference between the revenues earned from
fied period.

tomer
ues earned from
 Prospected Lifetime Value

Description PLV is used to account for the lifetime value of a newly acquired customer (CLV) when making prospecti

PLV = Acquisition Rate * [Initial Margin + CLV] - Acquisition spending

mer (CLV) when making prospecting decisions.