CCRS Customer Lifetime Value & Churn Management

Question 1

What does Customer Lifetime Value (CLV) represent in a business context?

Accepted Answer

The total profit a business can expect from a customer throughout the entire relationship

Answer

The total revenue a customer generates in their first year

Answer

The average order value multiplied by monthly purchase frequency

Answer

The cost of acquiring a new customer

Question 2

Which formula is most commonly used to calculate basic Customer Lifetime Value?

Accepted Answer

CLV = (Average Purchase Value × Purchase Frequency × Customer Lifespan) − Customer Acquisition Cost

Answer

CLV = Average Purchase Value × Customer Lifespan

Answer

CLV = Monthly Revenue / Total Customers

Answer

CLV = Average Revenue Per User × 12

Question 3

How is monthly customer churn rate correctly calculated?

Accepted Answer

(Customers lost in month / Customers at start of month) × 100

Answer

(New customers gained / Total customers) × 100

Answer

(Churned customers / New customers) × 100

Answer

(Customers at end of month / Customers at start of month) × 100

Question 4

A company starts the month with 500 customers, acquires 50 new ones, and ends with 490. What is the churn rate?

Accepted Answer

12%

Answer

2%

Answer

10%

Answer

16%

Question 5

What does ARPU stand for and what does it measure?

Accepted Answer

Average Revenue Per User — the average revenue generated per user per period

Answer

Average Rate Per User — the discount rate applied to customer accounts

Answer

Annual Revenue Per User — total yearly revenue divided by total customers

Answer

Adjusted Revenue Per Unit — revenue adjusted for refunds and cancellations

Question 6

What is the primary distinction between voluntary and involuntary churn?

Accepted Answer

Voluntary churn is customer-initiated cancellation, while involuntary churn occurs due to failed payments or card expiration

Answer

Voluntary churn occurs due to payment failures, while involuntary churn is customer-initiated

Answer

Voluntary churn affects enterprise customers, while involuntary churn affects small businesses

Answer

Voluntary churn is always reversible, while involuntary churn is always permanent

Question 7

Which of the following is considered a leading indicator of potential customer churn?

Accepted Answer

Decreased product usage frequency and login activity

Answer

A recent positive customer satisfaction survey score

Answer

A customer's first purchase anniversary

Answer

A recent upsell or cross-sell acceptance