Question

A local car dealership's average customer comes in once every 10 years, and spends $30,000 on each purchase. An average customer in that particular town will spend 40 years frequenting that dealer. What is their lifetime value?

Answer 1

The lifetime value of a local car dealership for an average customer is $120,000.

What is meant by a lifetime value?

A lifetime value is an average amount that is being earned by the customer over the time period till its being a customer of a particular service.

Given values:

Amount spent by customer: $30,000

The average number of years: 40 years

Computation of lifetime value (LTV):

$\rm\ LTV=\rm\ Average \rm\ number \rm\ of \rm\ years \times\ \rm\ Amount \rm\ spent \rm\ by \rm\ a \rm\ customer\\\rm\ LTV= 40 \times\ \ 30,000\\\rm\ LTV=\ 120,000$

Therefore, when a customer spends $30,000 on a car dealership for 40 years of average time then its lifetime value would be $120,000.

Learn more about the lifetime value in the related link:

brainly.com/question/16926291

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