Tyrone is attempting to measure the long-term value or profitability of his customers. Tyrone is measuring:
A) Sales per customer per quarter
B) Current operating profit minus direct costs
C) Gross revenue minus net revenue
D) Lifetime value of the customer
E) Relationship revenue minus overhead costs

Question

Quizplus · Accepted Answer

Tyrone is attempting to measure the long-term value or profitability of his customers, which is also known as the lifetime value of the customer. Option A measures sales per customer per quarter, which only gives a short-term view of customer profitability. Option B measures current operating profit minus direct costs, which only gives a current profitability view and does not take into account the long-term value of the customer. Option C measures gross revenue minus net revenue, which does not give a clear understanding of customer profitability. Option E measures relationship revenue minus overhead costs, which may be relevant in the short-term but does not consider the long-term value of the customer.

Tyrone Is Attempting to Measure the Long-Term Value or Profitability