These spreadsheet exhibits relate to the case Maru Batting Center: Customer Lifetime

Value, Case #KEL688.

©2012 by the Kellogg School of Management at Northwestern University. This case was
developed with support from the December 2009 graduates of the Executive MBA
Program (EMP-76). This case was prepared by Evan Meagher ’09 under the supervision of
Professor Julie Hennessy. Cases are developed solely as the basis for class discussion.
Cases are not intended to serve as endorsements, sources of primary data, or illustrations
of effective or ineffective management. To order copies or request permission to
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the permission of Kellogg Case Publishing.
 Elite Elite
Little Summer Ballplayers Ballplayers Entertainment
Leaguers Sluggers (Print Ad) (Party) Seekers
Contact Cost ¥1,000 ¥1,500 ¥300 ¥12,500 ¥50
Response Rate 10.0% 15.0% 0.5% 25.0% 2.5%
Acquisition Cost ¥10,000.0 ¥10,000 ¥60,000 ¥50,000 ¥2,000

Workers Needed 2 1 1 1 2
Worker Labor Cost ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
Instructors Needed 1 0 1 1 0
Instructor Hourly Labor Cost ¥3,000 N/A ¥4,500 ¥4,500 N/A
Total Cost Per Hour ¥6,000 ¥1,500 ¥6,000 ¥6,000 ¥3,000

Hourly Price Charged ¥6,500 ¥3,000 ¥7,500 ¥7,500 ¥4,000

Hourly Margin ¥ ¥500 ¥1,500 ¥1,500 ¥1,500 ¥1,000
Hourly Margin % 7.69% 50.00% 20.00% 20.00% 25.00%
Annual Hours 10.0 4.0 20.0 20.0 1.5
Annual Margin ¥ ¥5,000 ¥6,000 ¥30,000 ¥30,000 ¥1,500

Retention Rate 75.0% 50.0% 60.0% 60.0% 35.0%

Interest Rate 10.0%
 0 1 2 3 4 5

1 2 3 4 5 6
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Little Leaguers
Hourly Revenues ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500
Hourly Costs ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
Hourly Margin ¥500 ¥500 ¥500 ¥500 ¥500 ¥500
# of Annual Hours 10 10 10 10 10 10
Annual Margin ¥ ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000
Survival Rate 100% 75.0% 56.3% 42.2% 31.6% 23.7%
Customer Acquisition Cost ¥10,000 0 0 0 0 0
Annual Profit (¥5,000) ¥3,750 ¥2,813 ¥2,109 ¥1,582 ¥1,187
NPV of Annual Profit (¥5,000) ¥3,409 ¥2,324 ¥1,585 ¥1,081 ¥737
Cumulative Profit to Date (¥5,000) (¥1,250) ¥1,563 ¥3,672 ¥5,254 ¥6,440
NPV of Cumulative Profit to Date (¥5,000) (¥1,591) ¥733 ¥2,318 ¥3,399 ¥4,136

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Summer Sluggers
Hourly Revenues ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000
Hourly Costs ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
Hourly Margin ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
# of Annual Hours 4 4 4 4 4 4
Annual Margin ¥ ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
Survival Rate 100.0% 50.0% 25.0% 12.5% 6.3% 3.1%
Customer Acquisition Cost ¥10,000 0 0 0 0 0
Annual Profit (¥4,000) ¥3,000 ¥1,500 ¥750 ¥375 ¥188
NPV of Annual Profit (¥4,000) ¥2,727 ¥1,240 ¥563 ¥256 ¥116
Cumulative Profit to Date (¥4,000) (¥1,000) ¥500 ¥1,250 ¥1,625 ¥1,813
NPV of Cumulative Profit to Date (¥4,000) (¥1,273) (¥33) ¥530 ¥787 ¥903

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Elite Ballplayers (Print Ad)
Hourly Revenues ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500
Hourly Costs ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
Hourly Margin ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
# of Annual Hours 20 ¥20 ¥20 ¥20 ¥20 ¥20
Annual Margin ¥ ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000
Survival Rate 100.0% 60.0% 36.0% 21.6% 13.0% 7.8%
Customer Acquisition Cost ¥60,000 0 0 0 0 0
Annual Profit (¥30,000) ¥18,000 ¥10,800 ¥6,480 ¥3,888 ¥2,333
NPV of Annual Profit (¥30,000) ¥16,364 ¥8,926 ¥4,869 ¥2,656 ¥1,448
Cumulative Profit to Date (¥30,000) (¥12,000) (¥1,200) ¥5,280 ¥9,168 ¥11,501
NPV of Cumulative Profit to Date (¥30,000) (¥13,636) (¥4,711) ¥158 ¥2,813 ¥4,262

Year Year Year Year Year Year

Entertainment Seekers
Hourly Revenues ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000
Hourly Costs ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000
Hourly Margin ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000
# of Annual Hours 1.5 1.5 1.5 1.5 1.5 1.5
Annual Margin ¥ ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
Survival Rate 100.0% 35.0% 12.3% 4.3% 1.5% 0.5%
Customer Acquisition Cost ¥2,000 0 0 0 0 0
Annual Profit (¥500) ¥525 ¥184 ¥64 ¥23 ¥8
NPV of Annual Profit (¥500) ¥477 ¥152 ¥48 ¥15 ¥5
Cumulative Profit to Date (¥500) ¥25 ¥209 ¥273 ¥296 ¥303
NPV of Cumulative Profit to Date (¥500) (¥23) ¥129 ¥177 ¥193 ¥198
 6 7 8 9 10 11 12 13 14 15

7 8 9 10 11 12 13 14 15 16
Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500
¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥500 ¥500 ¥500 ¥500 ¥500 ¥500 ¥500 ¥500 ¥500 ¥500
10 10 10 10 10 10 10 10 10 10
¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000
17.8% 13.3% 10.0% 7.5% 5.6% 4.2% 3.2% 2.4% 1.8% 1.3%
0 0 0 0 0 0 0 0 0 0
¥890 ¥667 ¥501 ¥375 ¥282 ¥211 ¥158 ¥119 ¥89 ¥67
¥502 ¥342 ¥234 ¥159 ¥109 ¥74 ¥50 ¥34 ¥23 ¥16
¥7,330 ¥7,998 ¥8,498 ¥8,874 ¥9,155 ¥9,366 ¥9,525 ¥9,644 ¥9,733 ¥9,800
¥4,638 ¥4,980 ¥5,214 ¥5,373 ¥5,482 ¥5,556 ¥5,606 ¥5,641 ¥5,664 ¥5,680

Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
4 4 4 4 4 4 4 4 4 4
¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
1.6% 0.8% 0.4% 0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
0 0 0 0 0 0 0 0 0 0
¥94 ¥47 ¥23 ¥12 ¥6 ¥3 ¥1 ¥1 ¥0 ¥0
¥53 ¥24 ¥11 ¥5 ¥2 ¥1 ¥0 ¥0 ¥0 ¥0
¥1,906 ¥1,953 ¥1,977 ¥1,988 ¥1,994 ¥1,997 ¥1,999 ¥1,999 ¥2,000 ¥2,000
¥956 ¥980 ¥991 ¥996 ¥998 ¥999 ¥1,000 ¥1,000 ¥1,000 ¥1,000

Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500
¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
¥20 ¥20 ¥20 ¥20 ¥20 ¥20 ¥20 ¥20 ¥20 ¥20
¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000
4.7% 2.8% 1.7% 1.0% 0.6% 0.4% 0.2% 0.1% 0.1% 0.0%
0 0 0 0 0 0 0 0 0 0
¥1,400 ¥840 ¥504 ¥302 ¥181 ¥109 ¥65 ¥39 ¥24 ¥14
¥790 ¥431 ¥235 ¥128 ¥70 ¥38 ¥21 ¥11 ¥6 ¥3
¥12,900 ¥13,740 ¥14,244 ¥14,547 ¥14,728 ¥14,837 ¥14,902 ¥14,941 ¥14,965 ¥14,979
¥5,052 ¥5,483 ¥5,718 ¥5,846 ¥5,916 ¥5,954 ¥5,975 ¥5,986 ¥5,993 ¥5,996

Year Year Year Year Year Year Year Year Year Year

¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000
¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000
¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000
1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0 0 0 0 0 0 0 0 0 0
¥3 ¥1 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0
¥2 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0
¥306 ¥307 ¥308 ¥308 ¥308 ¥308 ¥308 ¥308 ¥308 ¥308
¥199 ¥200 ¥200 ¥200 ¥200 ¥200 ¥200 ¥200 ¥200 ¥200
 16 17 18 19 20 21 22

17 18 19 20 21 22 23
Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23

¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500 ¥6,500

¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥500 ¥500 ¥500 ¥500 ¥500 ¥500 ¥500
10 10 10 10 10 10 10
¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000 ¥5,000
1.0% 0.8% 0.6% 0.4% 0.3% 0.2% 0.2%
0 0 0 0 0 0 0
¥50 ¥38 ¥28 ¥21 ¥16 ¥12 ¥9
¥11 ¥7 ¥5 ¥3 ¥2 ¥2 ¥1
¥9,850 ¥9,887 ¥9,915 ¥9,937 ¥9,952 ¥9,964 ¥9,973
¥5,691 ¥5,698 ¥5,703 ¥5,707 ¥5,709 ¥5,711 ¥5,712

Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23

¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000

¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
4 4 4 4 4 4 4
¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0 0 0 0 0 0 0
¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0
¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0
¥2,000 ¥2,000 ¥2,000 ¥2,000 ¥2,000 ¥2,000 ¥2,000
¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000

Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23

¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500 ¥7,500

¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
¥20 ¥20 ¥20 ¥20 ¥20 ¥20 ¥20
¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000 ¥30,000
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0 0 0 0 0 0 0
¥8 ¥5 ¥3 ¥2 ¥1 ¥1 ¥0
¥2 ¥1 ¥1 ¥0 ¥0 ¥0 ¥0
¥14,987 ¥14,992 ¥14,995 ¥14,997 ¥14,998 ¥14,999 ¥14,999
¥5,998 ¥5,999 ¥5,999 ¥6,000 ¥6,000 ¥6,000 ¥6,000

Year Year Year Year Year Year Year

¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000 ¥4,000

¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000 ¥3,000
¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000
1.5 1.5 1.5 1.5 1.5 1.5 1.5
¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500 ¥1,500
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0 0 0 0 0 0 0
¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0
¥0 ¥0 ¥0 ¥0 ¥0 ¥0 ¥0
¥308 ¥308 ¥308 ¥308 ¥308 ¥308 ¥308
¥200 ¥200 ¥200 ¥200 ¥200 ¥200 ¥200