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Benefits to Understanding Customer Lifetime Value

by: Ron Zvagelsky On: September 6, 2017
3 min read

In the highly competitive and fast changing food service industry, customer lifetime value (CLV) is of immense importance to the bottom line. Obviously, losing high CLV customers and maintaining low CLV customers at their current level of spending would be bad for business. Understanding this makes it possible for you to adjust your approach to both groups by finding new ways to hold on to more profitable customers, while maybe also turning those low CLV customers into big spenders.

Customer Engagement

customerlifetimevalue.jpgOne of the keys to retaining high CLV customers is customer engagement. Customer engagement means more than just offering a smile while taking someone’s order at the point-of-sale. Employees and management have to engage with the customer throughout their restaurant experience and beyond.

Also, when customers feel appreciated – from the moment they approach the registered to the moment they walk out the door of the restaurant – it makes it more likely that low CLV customers will spend more on their current visit or make another purchase in the future.

Post-Sale Outreach

Restaurants can reach out to both high and low CLV customers after they finish their meal and leave. Anything from old-fashioned coupons to email and social media marketing can help you create a connection with the customer that encourages future sales. Also, making your interaction with the customer feel more personal and less businessy is always a plus.


Customer Rewards

Loyalty programs are highly popular with customers, and smart restaurant owners know this. So when you determine that a certain group of your customers are high CLV, it provides you with an opportunity to reward them for their customer loyalty. This kind of reward program is one of the best ways to ensure retention of such high CLV customers.

Rewards programs don’t have to be elaborate, computerized points systems. They can be as simple as punch cards offering a free sandwich with every 10 purchases. But any rewards program should be targeted to the specific group you’re focusing on. Offering low CLV customers a rewards program in which they can get a discount on a pricey item is a useful way of convincing them to purchase that item later at the standard price – which represents a form of up-selling.


Up-selling is one of the most effective ways to increase the value of low CLV customers. In this approach, restaurants try to convince the customer to add more items to their order or buy a more expensive item than the one he originally asked for. Up-selling can also mean selling the customer a complementary product that increases the profit margin on that particular sale.

For instance, some restaurants love it when customers upsize their orders by getting the supersized combo instead of the small one. And when customers are going through the drive-through and you ask them if they “want fries with that”, that’s also up-selling.  Suggesting pairing of a wine with a meal or bringing the dessert tray before being asked are also great ways to encourage larger tickets.


Despite the fact that restaurants have their prices printed on a big sign behind the counter or on a menu, customers will often ask employees what this or that costs. If they don’t like the answer, they sometimes just walk away. This is where down-selling can come in. Down-selling is a technique where restaurant employees can direct a customer to a lower cost item they might be more likely to buy.

This approach is very useful for selling to low CLV customers, since these people are more likely to be looking for bargains. Offering a cheaper product to these customers means at least some profit, which is better than no sale at all.

There are significant benefits for your restaurant if you understand the CLV of the people coming into your establishment. Having these numbers in hand gives you the power to target customers through engagement, rewards programs and marketing in a way that can retain high CLV customers and convince low CLV customers to spend a bit more.

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