09-10-2022
Business

Answered

Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $28,969 and has a margin of 8%. Based on historical averages, 83 of people buying a new vehicle at Eastern will return for service 9 times over the next 5 years. Though it varies considerably, Eastern generates approximately $98 in margin on each service visit after accounting for parts and direct labor costs.

What is the 5 year value of the service component of a customer who returns to Eastern Motors for servicing their vehicle?

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