Assume that the company decides to charge customersat the end of the month. How would this change the CLVfor Optus?

To answer this question, we need to understand what Customer Lifetime Value (CLV) is. CLV is the total revenue a company can expect from a single customer account. It considers a customer's revenue value and compares that number to the company's predicted customer lifespan. Businesses use this to identify significant customer segments that are the most valuable to the company.

Here's how charging customers at the end of the month might change the CLV for Optus:

1. Cash Flow Timing: If Optus starts charging its customers at the end of the month, the timing of cash flows will change. This could potentially affect the present value calculations in the CLV model, as the revenues will be received later than usual.

2. Customer Behavior: The change might also affect customer behavior. If customers know they will be charged at the end of the month, they might use the services more or less, depending on their individual preferences and usage patterns. This could affect the average revenue per user, a key component of CLV.

3. Churn Rate: The end-of-month billing could also impact the churn rate (the rate at which customers stop doing business with an entity). If customers find the end-of-month charges more convenient and manageable, the churn rate might decrease, thereby increasing the CLV.

4. Discount Rate: The change in the payment schedule might require a change in the discount rate used in the CLV calculation. If the payments are received later, the discount rate might need to be adjusted to account for the increased time value of money.

In conclusion, changing the billing cycle to the end of the month could have a significant impact on Optus's CLV, but the exact effect would depend on how these factors play out.