JULIE HENNESSY KEL689
Maru Batting Center:
Customer Lifetime Value
Exercise Synopsis
Maru Keitou, a decorated former collegiate softball player with a PhD from Oxford
University, ran Maru Batting Center (MBC) in the Roppongi district of Tokyo’s Minato ward.
She had a deep knowledge of the game and of her customers, but she lacked a marketing
background. She had recently signed up for a hosted customer relationship management service
that would allow her to track the cost of acquiring and serving each of her four main customer
segments. Using this data, she could determine which segments to target in the upcoming year.
Learning Objectives
After completing the exercise, students should be able to:
Calculate customer acquisition cost
Determine customer break-even
Calculate and explain customer lifetime value
Exercise Solution
1. What is the customer acquisition cost for Maru Batting Center for the following customers?
a. A Little Leaguer
Acquisition cost = Contact cost / Response rate
= ¥1,%
= ¥10,000
, TEACHING NOTE: MARU BATTING CENTER KEL689
b. A Summer Slugger
Acquisition cost = Contact cost / Response rate
= ¥1,%
= ¥10,000
c. An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts magazine
Acquisition cost = Contact cost / Response rate
= ¥.5%
= ¥60,000
d. An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala
event
Acquisition cost = Contact cost / Response rate
= ¥12,%
= ¥50,000
e. An Entertainment Seeker
Acquisition cost = Contact cost / Response rate
= ¥.5%
= ¥2,000
2. Without discounting cash flows to take into account the time value of money, how soon will
MBC break even on the following customers?
Students can use the provided spreadsheet to answer all of these questions.
a. A Little Leaguer
Per Table TN1, without discounting cash flows, MBC will break even on a Little League
customer in Year 3.
2 KELLOGG SCHOOL OF MANAGEMENT
Maru Batting Center:
Customer Lifetime Value
Exercise Synopsis
Maru Keitou, a decorated former collegiate softball player with a PhD from Oxford
University, ran Maru Batting Center (MBC) in the Roppongi district of Tokyo’s Minato ward.
She had a deep knowledge of the game and of her customers, but she lacked a marketing
background. She had recently signed up for a hosted customer relationship management service
that would allow her to track the cost of acquiring and serving each of her four main customer
segments. Using this data, she could determine which segments to target in the upcoming year.
Learning Objectives
After completing the exercise, students should be able to:
Calculate customer acquisition cost
Determine customer break-even
Calculate and explain customer lifetime value
Exercise Solution
1. What is the customer acquisition cost for Maru Batting Center for the following customers?
a. A Little Leaguer
Acquisition cost = Contact cost / Response rate
= ¥1,%
= ¥10,000
, TEACHING NOTE: MARU BATTING CENTER KEL689
b. A Summer Slugger
Acquisition cost = Contact cost / Response rate
= ¥1,%
= ¥10,000
c. An Elite Ballplayer if MBC places the ad in the local baseball enthusiasts magazine
Acquisition cost = Contact cost / Response rate
= ¥.5%
= ¥60,000
d. An Elite Ballplayer if MBC purchases the list and invites all target customers to the gala
event
Acquisition cost = Contact cost / Response rate
= ¥12,%
= ¥50,000
e. An Entertainment Seeker
Acquisition cost = Contact cost / Response rate
= ¥.5%
= ¥2,000
2. Without discounting cash flows to take into account the time value of money, how soon will
MBC break even on the following customers?
Students can use the provided spreadsheet to answer all of these questions.
a. A Little Leaguer
Per Table TN1, without discounting cash flows, MBC will break even on a Little League
customer in Year 3.
2 KELLOGG SCHOOL OF MANAGEMENT
