8. Net-4-You is an Internet Service Provider that charges its 1 million customers $19.95 per month for its service. The company’s variable costs are $.50 per customer per month. In addition, the company spends $0.50 per month per customer, or $6 million annually, on a customer loyalty program designed to retain customers. As a result, the company’s monthly customer retention rate was 78.8 percent. Net-4-You has a monthly discount rate of 1 percent.

a.      What is the customer lifetime value?

b.     Suppose the company wanted to increase its customers monthly retention ate and decided to spend an additional $0.20 per month per customer to upgrade its loyalty program benefits. By how much must Net-4 You increase its monthly customer retention rate to avoid reducing customer lifetime value resulting from a lower customer margin?