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How Customer Lifetime Value Affects Your Business, and 5 Ways to Increase It
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How Customer Lifetime Value Affects Your Business, and 5 Ways to Increase It

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Some customers are more valuable than others. But just how more valuable? This infographic covers what customer lifetime value is, how to increase it, and how to get customers back to your small …

Some customers are more valuable than others. But just how more valuable? This infographic covers what customer lifetime value is, how to increase it, and how to get customers back to your small business.


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  • 1. $ $ $ $ $ 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) Customer Lifetime 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 a NO-BRAINER: Get more customers to come back New customers churn at very high rates... ...but once a customer comes back a second 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 Value Affects Your Business Sounds simple, but even at big chains, many customers don’t come back.1 So want to increase 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: All information, graphics, and logos, found on this website are the intellectual property of their respective authors and any use by others for any reason is strictly prohibited without the specific written consent of the respective author(s). 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 in Next 4 Months After 2nd Visit Retail Restaurants CasualDining Salon&Spa Retail Restaurants CasualDining Salon&Spa KEEP IN TOUCH WITH CUSTOMERS with timely emails, text messages, and social media posts. 2 0% 10% 20% 30% 40% 50% 60% 70% 80%

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