4. Customer lifetime value — a.k.a. “the long game”
The real holy grail is to increase total spend with your brand over time; this is the single best metric for judging any modern business — from retail to food delivery. Businesses that can show their customer lifetime values far exceed the cost of acquiring a customer enjoy sky-high valuations, even if they aren’t yet making a profit. Lifetime value can grow in three ways: increase visit frequency, increase average check, or decrease customer churn.
For most brands, driving repeat purchasing is the best way to improve this number (and same-store sales). You can of course take price to drive short-term gains but ultimately you need to see the same customers coming back more often and that requires strong marketing execution. Building a strategy around customer lifetime value incentivizes incremental purchases for known customers and increases share of wallet. As a bonus, it’s great hospitality; high-touch and tailored to exactly where customers are in their journey.
While loyal customers do indeed come back more often and are more prone to purchase direct, saving on third-party fees, there’s another huge advantage of a repeat guest with strong loyalty—they tend to have higher customer satisfaction, of course, which makes them more resilient to one bad experience, thus drastically decreasing future breakage. We all make mistakes; loyal customers forgive.
But loyalty solely with rote discounts doesn’t work. Instead, restaurants should work to build true brand affinity through experiences. VIP dinners, passes to cut the line, and special access like new hidden menu feature can make a guest feel extra special while encouraging direct purchasing. No one gets upgraded when they book a room through Expedia—restaurants must begin to lean into “all customers are not equal."
A nurtured customer base, thoughtfully built through direct engagement, culminates in exceptional lifetime value. This is not just good business, it feels good too.
Zach Goldstein is the CEO and Founder of Thanx. Founded in 2011, Thanx is a leading guest engagement and retention platform helping restaurants and retailers become more digitally agile to maximize customer lifetime value. Prior to earning his MBA from Stanford, Goldstein honed his experience in the customer loyalty space at Bain & Company, helping companies perfect their retention and reward strategies as early as 2005. Goldstein has earned a reputation as a vocal thought leader in the restaurant-tech space through his Food Fighters podcast and authorship such as the widely-revered Four Horsemen of the Restaurant Apocalypse?