When a customer walks in for the first time and spends €15, what are they worth to you? Most owners say "€15". That is where money is lost. A customer is worth every order they will place over the whole relationship. That number is called customer lifetime value (CLV).
The sum
CLV = average order value x purchase frequency x retention time
An example:
- Average order: €15
- Frequency: 3 times a month (36 a year)
- Retention: 3 years
CLV = 15 x 36 x 3 = €1,620.
The "€15" customer is an asset worth over €1,600, and if they recommend your restaurant to two friends it is worth even more. The figures are illustrative: use your own.
Why it matters
- How much you can invest to win a customer. If each customer is worth €1,600, spending €20 or €30 to win one can be a good deal.
- What retention is worth, not just acquisition. Losing a loyal customer isn't losing one order.
- Where the customer sits. A customer who finds you directly can order on your channel, with no GetFoodies commission, and protect all that value. A customer who arrives through a marketplace is a great source of new customers, and the commission pays for that acquisition.
How to raise CLV
Look at the formula: to raise it you don't need more customers, you need to improve one of the three factors.
- Raise average order value: suggestions, extras, a well-built menu.
- Increase frequency: loyalty, reminders, offers at the right moment.
- Lengthen retention: a good experience and regular communication.
Improving each factor by 20% multiplies CLV in a compounding way.
How GetFoodies helps
It brings the three levers together: dish suggestions at checkout to lift order value, cashback and points to raise frequency, and data plus email marketing to keep the relationship going. For customers who order on your channel, the CLV stays with you.
Do your own sum
Take your average order, the typical frequency of a good customer and the years they usually stay. Multiply. The result is what is at stake each time you win, or lose, a customer.