Increasing Customer Lifetime Value

• Impact of Discount Rate: Analyzing the effect of discount rates on CLV, it is found that a higher discount rate reduces the present value of future cash flows, thus decreasing CLV. The transition from a 10% to a 25% discount rate results in a noticeable decrease in both mean and median CLV.

• Extension of Projection Period: Extending the customer relationship period has a significant positive impact on CLV. The scenario with an additional year shows the highest mean and median CLV, suggesting that retaining customers for longer periods is highly beneficial.

• Increase in Spending per Time Period: Increasing customer spending also enhances their lifetime value. A scenario with a 15% increase in spending shows a marked improvement in CLV compared to the original scenario.

The presentation proposes tiered membership options to incentivize customers to extend their memberships and foster long-term relationships. These include:

• 1 Month Membership: An entry point for new customers with benefits like access to the Wine of the Month and options for pickup or delivery.

• 6 Months Membership: Offers a 10% discount at the restaurant and a free cheese platter delivered monthly.

• Annual Membership: Provides exclusive access to Wine Club trips, private events with sommelier-guided wine pairings, access to exclusive wine bottles, and a discounted Wine Cruise Experience.

The focus is on creating tiered membership with exclusive benefits to build loyalty over time and increase annual membership enrollment rates.