What is the dollar value of a loyal customer?
Know The Dollar Value OF A Loyal Customer
In the restaurant business, one of the most important numbers for you to know is the lifetime dollar value of a loyal customer. If you know that a customer comes in and spends a $100 each month over a 12-month period then they are worth $1200. Interestingly though, you may not realise that the lifetime dollar value of a loyal customer is around 5 years.
- Knowing this number changes how you think about your business.
- This changes the way you think about your customers.
- $100 a month x 12 months = $1,200 x 5 years = $6,000 Lifetime Dollar Value
- If that person refers just one other in those 5 years then = $12,000
- You can make decisions on how much to spend to acquire a customer.
- This is why you should strive to WOW customers - even those with vouchers.
Why is this important? In your restaurant marketing plans, you could start to decide on how you recruit customers and spend your marketing dollar. If it costs you $50 to get a $100 customer and you think that customer is only worth a $100, then you might not want to do it. But if it costs you $50 to get this person and you know their Lifetime Dollar Value is between $6,000-$12,000, I’m sure you will strive to keep them.
- Work out what your average transaction is for a loyal customer
- Then times by their yearly visits
- And lastly, times by 5 years to work out the Average Lifetime Dollar Value of a loyal customer.