Final answer:
The lifetime value of a customer is not the average age of your customer; it is the total revenue a company expects from a customer over the course of their relationship. The lifetime value calculation involves present value of future cash flows, whereas the average age is just a demographic statistic.
Step-by-step explanation:
The statement that the lifetime value of a customer is the average age of your customer is false. The lifetime value of a customer refers to the total amount of money a company expects to earn from a customer throughout their business relationship. The concept involves calculating the present value of the future cash flows attributed to the customer relationship. It takes into account the customer's revenue contribution, margin level, retention rate, and the associated costs of serving the customer over time. On the other hand, the average age of your customer is a demographic statistic that might be used for marketing or product development strategies but is not related to the lifetime value calculation.
In the context of the supplied information, it's important to clarify the average lifetime of a product like a cell phone, mentioned as three years, is a measure of how long the product is expected to function before it fails. This is different from the concept of the lifetime value of a customer, as previously explained. The manufacturer's policy to replace any cell phone failing within two years is an aspect of customer service that could influence the lifetime value of a customer by potentially increasing customer satisfaction and retention.