$

$$ $

$

Steve

Steve

And 5 Ways to Increase It

What is Customer Lifetime Value?

Obviously, you want Customer Lifetime Value to

be as high as possible.

Customer Lifetime Value is the projected amount of revenue a customer will generate over their lifetime at your business.

Here’s the formula for estimating lifetime value:

Steve

2009 2010 2011 2012 2013

Avg. Spend Per Month

Monthly Customer Churn Rate(% of This Month’s Customers Who Don’t Come Back)

CustomerLifetime Value

(CLV)

This is Steve, a loyal customer. Over time, he’s worth a lot of money.

Average Spend Per Month

Average Spend Per Month

Average Spend Per Month

of Customers Don’t Come Back Each Month

of Customers Don’t Come Back Each Month

of Customers Don’t Come Back Each Month

Lifetime Value

Lifetime Value

Lifetime Value

20%

20%

10%

$10

$12

$10

$50

$60

$100

To improve it, you could increase spend

or get more customers to come back(reduce the monthly churn rate)

That’s aNO-BRAINER:Get more customers to come back

New customers churn at very high rates...

...but once a customer comes back asecond time, they’re hooked!2

% of Customers Who Don’t Come Back Within Next 6 Months After A Visit

58%58%61%56%53%

% of New Customers Not Returning in Next 4 Months After First Visit

TREAT NEW CUSTOMERS LIKE VIPS

with discounts, freebies, or even just a

simple “Thanks for trying us!”

HERE’S 5 WAYS TO DO IT

1

How Customer Lifetime ValueAffects Your Business

Sounds simple, but even at big chains, many customersdon’t come back.1

So want toincrease CLV?

Get more customers to come back.

TREAT REPEAT CUSTOMERS LIKE

KINGS with VIP lines, customer

photo walls, and other over-the-top

experiences they’ll tell their friends

about you.

5

IMPLEMENT A MODERN REWARDS PROGRAM

like FiveStars

to boost your

customer visits

by 12-44%.

4

GIVE CUSTOMERS A REASON TO

COME BACK SOON with enticing

deals that have an expiration date.3

For example:

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Sources:

1. Restaurant Industry Tracking Survey by Dectiva: http://nrn.com/latest-headlines/study-restaurants-improve-customer-retention-rates

2. FiveStars Data Study

Some restaurants do a good job with retention, while others don’t.

Distribution of Monthly Retention Rates Across Over 100 Restaurants2

Top 20%

The most successful small businesses get

over 60 to 70% of their customers coming back

on a monthly basis.2

Look how high this retention

rate is

% of 2nd Time Customers Returning inNext 4 Months After 2nd Visit

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KEEP IN TOUCH WITH CUSTOMERS

with timely emails,

text messages, and social

media posts.

2

0%

10%

20%

30%

40%

50%

60%

70%

80%