Initial Fixed Costs

Response 7,953 Name Cost $ 0.10 Resp Rate 2.3% Catalogue $ 0.75 List 345,783 $ 0.85 CPO $ 36.96

LT $50 (Assuming Lapsed Customers)Initial Next Next Next Next Next

< $50 Order 12 months 24 months 36 months 48 months 60 monthsTime period 0 1 2 3 4 5Number of active customers 4657 4046 1918 970 927 820Annual survival rate 87% 47% 51% 96% 88%Cumulative survival rate 87% 41% 21% 20% 18%Average # of orders** 1 1.17 1.36 1.44 1.42 1.33Average Purchase $ 31.84 $ 32.09 $ 41.78 $ 51.05 $ 52.43 $ 53.63 Total sales $ 148,279 $ 152,139 $ 109,129 $ 71,419 $ 68,788 $ 58,618 Gross Profit $ 62,277 $ 63,898 $ 45,834 $ 29,996 $ 28,891 $ 24,619 Fixed costs* $ 172,107 $ 24,276 $ 11,508 $ 5,820 $ 5,562 $ 4,920 Net profit -$ 109,829 $ 39,622 $ 34,326 $ 24,176 $ 23,329 $ 19,699 Discount rate 1.00 1.10 1.21 1.33 1.46 1.61PV -$ 109,829 $ 36,020 $ 28,369 $ 18,164 $ 15,934 $ 12,232 Cumulative NPV -$ 109,829 -$ 73,809 -$ 45,440 -$ 27,277 -$ 11,343 $ 889 CLV -$ 23.58 -$ 15.85 -$ 9.76 -$ 5.86 -$ 2.44 $ 0.19

GT $50 (Assuming Lapsed Customers)

> $50 Initial Next Next Next Next NextOrder 12 months 24 months 36 months 48 months 60 months

Time period 0 1 2 3 4 5Number of active customers 3296 2875 1653 866 761 623Annual survival rate 87% 57% 52% 88% 82%Cumulative survival rate 87% 50% 26% 23% 19%Average # of orders** 1 1.24 1.49 1.52 1.40 1.34Average Purchase $ 95.55 $ 93.46 $ 74.02 $ 67.75 $ 67.12 $ 78.26 Total sales $ 314,933 $ 334,213 $ 182,311 $ 89,091 $ 71,684 $ 65,504 Gross Profit $ 132,272 $ 140,369 $ 76,571 $ 37,418 $ 30,107 $ 27,512 Fixed costs* $ 121,809 $ 17,250 $ 9,918 $ 5,196 $ 4,566 $ 3,738 Net profit $ 10,463 $ 123,119 $ 66,653 $ 32,222 $ 25,541 $ 23,774 Discount rate 1.00 1.10 1.21 1.33 1.46 1.61PV $ 10,463 $ 111,927 $ 55,085 $ 24,209 $ 17,445 $ 14,761 Cumulative NPV $ 10,463 $ 122,390 $ 177,475 $ 201,684 $ 219,129 $ 233,890 CLV $ 3.17 $ 37.13 $ 53.85 $ 61.19 $ 66.48 $ 70.96

CLV (Assuming Lapsed Customers)

0 1 2 3 4 5

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LT50 GT50

LT $50 (Assuming Original Customer Cohort)

Initial Next Next Next Next Next< $50 Order 12 months 24 months 36 months 48 months 60 monthsTime period 0 1 2 3 4 5Number of active customers 4657 4046 1918 970 927 820Annual survival rate 87% 47% 51% 96% 88%Cumulative survival rate 87% 41% 21% 20% 18%Average # of orders** 1 1.17 1.36 1.44 1.42 1.33Average Purchase $ 31.84 $ 32.09 $ 41.78 $ 51.05 $ 52.43 $ 53.63 Total sales $ 148,279 $ 152,139 $ 109,129 $ 71,419 $ 68,788 $ 58,618 Gross Profit $ 62,277 $ 63,898 $ 45,834 $ 29,996 $ 28,891 $ 24,619 Fixed costs* $ 172,107 $ 27,942 $ 27,942 $ 27,942 $ 27,942 $ 27,942

Net profit -$ 109,829 $ 35,956 $ 17,892 $ 2,054 $ 949 -$ 3,323

Discount rate 1.00 1.10 1.21 1.33 1.46 1.61

PV -$ 109,829 $ 32,687 $ 14,787 $ 1,543 $ 648 -$ 2,063

Cumulative NPV -$ 109,829 -$ 77,142 -$ 62,355 -$ 60,812 -$ 60,163 -$ 62,227 CLV -$ 23.58 -$ 16.56 -$ 13.39 -$ 13.06 -$ 12.92 -$ 13.36

GT $50 (Assuming Original Customer Cohort)

> $50 Initial Next Next Next Next NextOrder 12 months 24 months 36 months 48 months 60 months

Time period 0 1 2 3 4 5Number of active customers 3296 2875 1653 866 761 623Annual survival rate 87% 57% 52% 88% 82%Cumulative survival rate 87% 50% 26% 23% 19%Average # of orders** 1 1.24 1.49 1.52 1.40 1.34Average Purchase $ 95.55 $ 93.46 $ 74.02 $ 67.75 $ 67.12 $ 78.26 Total sales $ 314,933 $ 334,213 $ 182,311 $ 89,091 $ 71,684 $ 65,504 Gross Profit $ 132,272 $ 140,369 $ 76,571 $ 37,418 $ 30,107 $ 27,512 Fixed costs* $ 121,809 $ 19,776 $ 19,776 $ 19,776 $ 19,776 $ 19,776 Net profit $ 10,463 $ 120,593 $ 56,795 $ 17,642 $ 10,331 $ 7,736 Discount rate 1.00 1.10 1.21 1.33 1.46 1.61PV $ 10,463 $ 109,630 $ 46,938 $ 13,255 $ 7,056 $ 4,803 Cumulative NPV $ 10,463 $ 120,093 $ 167,031 $ 180,286 $ 187,343 $ 192,146 CLV $ 3.17 $ 36.44 $ 50.68 $ 54.70 $ 56.84 $ 58.30

CLV (Assuming Original Customer Cohort)

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• R F M– Retention– Order– Value

• 3 or 5 years horizon?• When to clean up the file• What to do with those LT50?• 42% GM?