et’s dive right into the deep end and talk about a big metric—Customer Lifetime Value. What is it, why should you use it, and how do you put it into practice to impact value over time?
What is CLV?
Customer Lifetime Value (which we’ll call CLV) is the total amount of money a customer is expected to spend with your brand during the lifetime of the relationship. The power of focusing on CLV is that you use real customer data to predict three key things:
- Which customers will come back
- How often they will come back
- How much they will spend
Walk the Walk of Being Truly Customer-Focused
A good understanding of your CLV depends on what behaviors you are tracking, and if those behaviors are linked in one source. (A CRM that tracks every engagement your guest has with your brand, and then analyzes their frequency and spend by behavior is extremely helpful.)
Endgame, though, is transforming this knowledge into action steps that improve your customer experience. Knowing how your customers behave, then asking the right questions about influencing customer behavior can help you remove barriers so engaged customers will come back more often, spend more overall, and increase their own CLV.
Ask the Right Questions
To get a sense of what this looks like in practice, here are four behavior-driven questions you can ask to drive customer lifetime value:
Are you making it easy for customers to dine with you the way they want to?
If your customers tip the scales towards to-go food, focusing your menu innovation and streamlining systems around online ordering, pick-up, and delivery will be key in driving up CLV. Wisely’s data shows that take-out is here to stay: Pre-COVID-19, online orders made up 11% of new parties, post-COVID-19 online orders are holding steady at around 48%.
Are you communicating with your customers the way they communicate with you?
If guests are highly engaged with email, build more targeted email content. If they are more active on social, build processes to engage comments, posts, and mentions—and even share guest content on your channels. Research shows that customer satisfaction depends on engaging customers in their preferred channel of communication.
Do you proactively provide opportunities for guests to give feedback?
Making it easy and accessible for your customers to give feedback is essential. Especially when 96% of customers won’t complain to you directly. Providing a good feedback experience pays dividends too—Wisely’s data shows that customers who provide feedback are 8% more likely to return.
Do you know your customers regional behaviors and preferences (and engage them accordingly)?
Your customers’ dine-in/to-go ratio, favorite dishes, and frequency are likely to differ by location. Taking action based on each location’s specific behaviors is a best-practice in driving up CLV. All signs point to doubling-down on local as the new normal.
Pivoting to Customer Lifetime Value as your north star pushes you to focus on actual customer behavior. Brands boost profitability over time by investigating behaviors—and drive up frequency and spend by taking impactful, customer-centered actions.
Photo Credit: Guao Ewk