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bjbj Hi, Ken Burgin here from Profitable Hospitality with another video tip of the week. Let s
have a look at the Long Term Value of a Customer. It s such a simple concept. It s easy to forget.
As soon as customers notice people who just spend $3 on a coffee or on one transaction
but they value over months and years, when we see their long term value, it makes you
really look at what you re prepared to spend on acquiring a customer to start with and
also, the investment you re prepared to make in maintaining them and having them continue
as regular customers. So, the first example we re going to look at is a person who buys
a coffee from you every morning on the way to work. Let s say they spend $3 and let s
assume that they come every day of the week, 4 weeks of the month, that s 20 visits every
month. And, let s say they visit for 11 months of the year; 1 month they re on holidays.
And, let s say that we look at the value of them over 3 years. Now, that s $1,980, very
different to $3 but that s the amount of money they re going to spend with you over 3 years.
What about the person who comes in and grabs a quick lunch each day? s say they spend $8
and they also come everyday. Let s say that s 20 times a month and they visit 11 months
a year and let s look at their figures over 3 years. That s really an extraordinary amount
of money. Now let s look at a brunch customer. They come once a week, obviously on Sunday
and let s say that they spend $16 each time. They come in 4 times a month, once a week
and let s again assume it s 11 times a year and over 3 years, that s more than $2,000
that they re spending. The dinner customer is a different proposition. Obviously, they
spend quite a bit more but they don t come as frequently. So, let s put some figures
in. They come 6 times a year and let s look at that over 3 years and it s still quite
a considerable amount of money. Now let s look at the corporate group who wants to hire
your board room once a month. They re going to be spending quite a bit of money. They
want it the day for their sales meeting. They want to come once a month and they re going
to hire it for 10 months a year and over 3 years, that is really worth an extraordinary
amount of money. Of course, the other group of people who has got this proposition well
and truly understood, and make use of it very well, is a gymnasium. If you re a member of
the gym, let s say you re spending $85 a month on your membership, you visit as many times
as you want during the month and you visit 12 months of the year and what are you worth
over 3 years? You re spending more than $3,000 in 3 years. Finally, how does it work for
a holiday resort? Let s say you go away occasionally for a nice weekend. You spend $600 for the
weekend on accommodation, food and drinks and you visit twice a year. Over 3 years,
you keep going back and you re worth to them $3,600 over the course of the year. You don
t need spreadsheets to work these figures out. A pencil and a paper is quite sufficient
but it really makes you look at the person who comes and grabs a coffee everyday, all
those quiet, corporate group who just turn up for their meeting once a month, the gym
membership lunch and it s worth 2-3-5-10 dollars or euros or pounds whenever they turn up but
they re actually worth thousands of dollars each year. So, that s long term value of a
customer. It s a very easy one to explain to staff and for them to understand and makes
you look at customers in quite a different way. m Ken Burgin. This has been another video
tip of the week from Profitable Hospitality. On the website, we ve got hundreds and hundreds
of resources to help you with marketing and promotion not only to help you find new customers
but to keep existing customers loyal, attentive and coming back often and spending. You can
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