Problem
Krei Tech Financial Group (KTF) is reviewing its past performance and formulating its strategy for the future. Last year, KTF had total revenue of $4.3 billion and variable costs of $3.5 billion. It had a customer base of 2.3 million. KTF's uses a discount rate of 12%. KTF was quite happy with its current customer retention rate of 85%. However, a recent report indicated that the industry's average customer retention rate is 85%. Through an internal audit, KTF found that by improving the company's customer service, they can increase their retention rate from 85% to 88%. However, this would cost an additional $250 per customer. Using the Customer lifetime value metric for KTF, would you advise KTF to undertake this project to improve their customer service and retention rate? Provide the logic and reasoning for your recommendations along with the customer lifetime value calculations.