36 Work out your lifetime customer value
One of the most valuable lessons to learn in business is the concept
of “lifetime value”. This is what a customer is worth to you over the
average period of time that they stay loyal to you. It is enormously
effective in terms of increasing your own and your staff ’s perception
of how valuable a customer is.
Obviously different customers have different values, but you can
still make a decent approximation. Let’s assume you have a
customer who buys his morning takeaway coffee from you every
day and his lunch three days out of five. On average he spends £8 a
day which is £24 a week. We’ll allow him six weeks holiday, so that’s
£1,104 a year. If we assume that he stays with you for four years
then this equates to a total value of £4,416. This gives you a very
different perspective of how you need to treat him daily, and how
much money you should be prepared to spend to attract him in
the first place.
Every coffee or food business has different customer profiles but
here are a couple of real life examples that can perhaps help to
illustrate the point a little more clearly.
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