What is Restaurant Customer Lifetime Value (Tips to Improve)
If you’ve ever wondered how much value each of your regular customers brings to your business, the answer lies in one simple concept: Customer Lifetime Value.
Most of the time, when we think about growing our food business, we focus on attracting new people. But the real growth often comes from getting the same people to come back again and again. That’s why understanding the lifetime value of customers is important. It helps you see how much a single customer is worth to you over the time they continue to order from you. And once you understand it, you’ll know exactly where to focus your energy to grow your sales.
Let’s break it down and see how it works, why it matters, and how you can use tools like BitesPOS to increase your customer lifetime value.
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What is Customer Lifetime Value?
Customer Lifetime Value (CLV or LTV) is the total amount of money a customer is expected to spend at your food business over the time they keep coming back. Instead of just focusing on how much they spend in one visit, it looks at how many times they come back and how much they spend each time.
For example, if someone visits your restaurant once a month and spends RM25 per visit, and they stay loyal for 3 years, their life value as a customer is:
RM25 x 12 visits x 3 years = RM900
That means one loyal customer could bring you RM900 over time. And this is just one person. Imagine if you had 100 such loyal customers. That’s RM90,000 without needing to spend more on marketing to new people.
How to Calculate Customer Lifetime Value?
There’s a simple way to calculate it:
CLV = Average Order Value x Purchase Frequency x Customer Lifespan
Let’s say your customer spends RM30 per visit, visits twice a month (24 times a year), and stays loyal for 2 years. Then:
CLV = RM30 x 24 x 2 = RM1,440
This means that one regular customer is worth RM1,440 to your business.
Even if you get just 10 more people like this, that adds RM14,400 to your total revenue. Focusing on building loyalty pays off.
Why Does Customer Lifetime Value Matter for Your Restaurant?
Understanding customer lifetime value helps you make better decisions about your marketing, service, and pricing. You’ll know:
- How much can you spend on promotions without losing money?
- Which customers are worth focusing on?
- Whether your current service is good enough to make people come back.
In Malaysia, customer loyalty is hard to win. A study by McKinsey showed that 76% of Malaysians are willing to try new brands if offered better deals or promotions. This means you need to offer reasons for your existing customers to keep choosing you again and again.
The good news? Loyal customers spend more. According to Bain & Company, loyal customers can spend up to 67% more than new customers.
How to Increase Customer Lifetime Value?
This is where things get exciting. You don’t need to do something huge to improve the life value of a customer. You just need to take small steps to make them feel valued.
Start by offering great service. Make sure orders are correct, food is fresh, and delivery is fast. But beyond this, use smart tools like BitesPOS.
BitesPOS helps you improve customer lifetime value by giving you the power to create and manage promotions. With it, you can:
Offer loyalty rewards after a certain number of visits.
Run birthday discounts to make customers feel special.
Launch limited-time offers that bring them back quickly.
Give personalized deals based on their past orders.
All this can be done from one simple system. And here’s the best part—when customers know they’ll get deals, rewards, or surprises, they’re more likely to keep choosing you instead of trying someone else.
In fact, promotions are one of the top three reasons Malaysians choose to order from a specific restaurant or cafe, according to Statista (2023).
And with BitesPOS, you don’t have to depend on social media posts or printed vouchers. You can directly set the promotions inside your POS, and they’ll automatically apply to your customers.
It also helps you track how well your promotions are doing and which ones are working best. So, you don’t have to guess anymore.
Focus on Repeat Customers, Not Just New Ones
It’s easy to think that getting more new people through the door is the answer. But did you know that getting a new customer can cost 5 times more than keeping an existing one?
So instead of spending more and more money on ads, you should focus on improving the experience for your existing customers. Make their journey smooth, give them value, and reward their loyalty.
Using a smart system like BitesPOS, you can create a full loyalty loop—where your customer comes in, orders, gets rewarded, and returns.
The Impact on Your Sales
Let’s say you currently have 50 regular customers, each worth RM500 in lifetime value. That’s RM25,000 in long-term revenue.
Now, by using promotions through BitesPOS, you increase their loyalty and push their value to RM800 each. You now make RM40,000 from the same people, without spending anything extra on advertising.
That’s the power of understanding and increasing customer lifetime value.
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FAQ‘s
If you’re ready to start getting more from your current customers, BitesPOS can make it easy for you. Instead of chasing new faces every day, build loyalty with the ones who already like your food. You’ll see the results—not just in your sales, but in the long-term growth of your business.
