Case Study

The case of complaining customer

Customer Lifetime Value

Customer lifetime value: taking infinite time period and assuming there is no
acquisition cost for the customer, using the following formula:
CLV = n x (a) x t
Where n = no. of weeks in a year = 52

a = average customer value per week (expenditure x visits)

t = average customer life span

So, the parameters for Mr. George Shelton =

a = $25x1 = $25

t = 20 (assuming)
So, CLV = n x (a) x t

= 52 x 25 x 20

= $26,000

How should Presto respond to Mr. Sheltons complaint:

Mr. J W Sewickley should reimburse the $235 claimed by
Mr. Shelton.
Also Mr. Sewickley should deliver the check himself to
Mr. Shelton and apologize for the inconvenience caused
so far and should offer to bear all out-of-pocket losses
as well.

What actions should Presto take to ensure it provides

quality service:

Mr. Sewickley should establish a clear model of

customer relationship management and service
standards at the top.
He should also have a discussion with Paul Hoffner on
handling customer complaints more efficiently and
listen to them in a more empathetic manner instead of
just looking for company profit at any cost.
He should also increase integration between the
different stores and the plant and customer relations
department.