I need help making sure I am doing this right...
I am trying to solve for the total Lifetime Value of a member where I deduct their initial order from the total.
A = # of members
B = 42% retention rate
C = $750 lifetime spend
D = $48 initial order
Total Lifetime Value = ABC - ABD (I know I can reduce this to AB(C-D) but I want to keep it easy for now.)
The "ABC" portion calculates the Lifetime Value portion.
The "ABD" portion is supposed to calculate the Initial Order amount that I need to deduct from the Lifetime Value.
Here is the part that has me questioning myself. Since the retention rate is only 42%, I would want to calculate the value of the initial order, which I am deducting in the second part of the equation, by taking the number of members * the initial order * .42. Correct? I am just questioning whether the second part of the equation should be "ABD" or just "AD"...
Can anyone help? If it is "ABD", can you help me understand why?
I really appreciate your help!