Reaching guests with the most lifetime value

If you’re like most businesses, about 60 percent of your revenue comes from only 20 percent of your guests. Instead of directing your marketing time and effort toward the 80 percent of people who are less likely to support you, you stand to gain far more if you can channel your resources into that valuable 20 percent who buy from you frequently and spend more when they do. Understanding customer lifetime value (CLV) can help you zero in on this critical segment of your audience. (You can calculate it by dividing the average per-guest spending each month by the percentage of guests that don’t return.) If you have the tools to understand your CLV, you know which offers and channels have driven the most sales. You are able to take the behaviors of your best guests and turn them into incentives that drive repeat business. You can use that information to attract similar guests who have the potential to become more loyal. You also understand what promotions and messages generate the best sales. Improving your CLV can help you expand the size of your most valuable segment of guests. So how can you do this? Track how much money a guest is likely to spend on repeat visits and other interactions with your business, or how likely they are to refer your business to others. Look for opportunities to collect actionable information from each step of a guest’s journey. Toast suggests making it as convenient as possible for guests to buy from you and share information. That includes their feedback, which you can use to assess your performance and identify action items. Lean on your loyalty program to encourage return visits and to communicate in targeted ways with your guests. Finally, bundle your offerings – it increases guests’ perception of your value.

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