Customer Lifetime ValueArjun and Ramesh planned to go on a vacation during their semester break. Both of them booked tickets for the same flight on the same day and at the same time.At the time of check-in, Ramesh was offered deluxe seats at no extra cost, while Arjun was charged ₹600 for the same.What is the reason for this?Arjun has a higher customer lifetime value as compared to Ramesh.Ramesh has a high return on investment.Ramesh is a high-value customer while Arjun is not.Arjun has a high chance of attrition
Question
Customer Lifetime ValueArjun and Ramesh planned to go on a vacation during their semester break. Both of them booked tickets for the same flight on the same day and at the same time.At the time of check-in, Ramesh was offered deluxe seats at no extra cost, while Arjun was charged ₹600 for the same.What is the reason for this?Arjun has a higher customer lifetime value as compared to Ramesh.Ramesh has a high return on investment.Ramesh is a high-value customer while Arjun is not.Arjun has a high chance of attrition
Solution
The reason for this could be that Ramesh has a higher Customer Lifetime Value (CLV) compared to Arjun. CLV is a prediction of the net profit attributed to the entire future relationship with a customer. The airline might have identified Ramesh as a high-value customer based on his past booking and spending patterns with the airline.
This could include factors like how frequently he flies with them, how much he spends on tickets, whether he often upgrades, etc. If Ramesh is identified as a high-value customer, the airline might offer him perks like free deluxe seats to ensure his continued patronage.
On the other hand, Arjun might not have a history of frequent bookings or high spending with the airline, so he is charged extra for the deluxe seats.
It's also possible that the airline is using a strategy to prevent attrition. If they believe Arjun has a high chance of attrition (i.e., he might stop using their services), they might charge him extra to maximize the profit they make from him while he is still a customer.
However, without more specific information about Arjun and Ramesh's history with the airline, it's hard to say for certain why one was charged extra and the other was not.
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