Louis Hansel

Digital Marketing

What is the Formula For Calculating Your Customer Lifetime Value?

August 7, 2021
What is the Formula For Calculating Your Customer Lifetime Value?

You can grow your base of great customers once you know your target buyers, so you can decide how much money to spend to keep those customers coming back.

One of the simplest ways to do the Customer Lifetime Value math is by researching how your restaurant has operated in the past.


The formula for calculating the customer lifetime value of your restaurant


Average of annual transactions per customer

X

Average profit per transaction

X

Average number of years remaining as customer

=

Customer Lifetime Value or CLV


Average annual transactions per customer

How often do your customers buy from you?

It could be that your customers come to your establishment every week, once a month, or just once.

Every day? Well, you should put a picture of them on the wall.


Average profit per transaction

How profitable each customer’s transaction is?

After taking each customer's costs off the table, you can figure out how valuable each customer transaction is.


Average number of years customers remain

 How many years do customers keep coming back?

Some customers return every year, for example at Christmas time. Those customers you've had for years are crucial to calculate your CLV.

After knowing your CLV, you can try to keep a close relationship with those loyal customers and use it to acquire and keep new ones.


Did you find your CLV?