Do you know just how much a single guest is worth?

Today, we’re talking about getting to know your Customer Lifetime Value.

What’s your “Customer Lifetime Value?”

That’s the revenue your hotel can expect to earn from each guest over the lifetime of that customer’s relationship with your hotel.

Does the average guest stay once?

Or, do they stay two times a year? And what’s the average revenue per visit?

You have to ask some questions about your guests

to get your CLV.

And you’ve got to do a little math like:

Calculate the average revenue per guest per visit.
Calculate the average number of times a guest visits over their lifetime.

Then multiply those two numbers

to get your CLV.

Knowing the average lifetime value of a customer

makes it crystal clear just how much a guest is worth.

Take Starbucks for example.

Years ago, a study suggested that the Starbucks CLV was $14,099. That means customers spend on average $14,099 over time.

Knowing your CLV helps you do a few things.

For starters, it helps you understand how much you can spend to acquire new customers. If Starbucks spent $100 to win a new customer, they’d be upside down if they tied those ad dollars to that first $5 cup of coffee.

But put that into context.

$100 to win $14,099 is a different story altogether.

More importantly…

Knowing your CLV also helps you have more meaningful conversations with ownership.

Imagine telling ownership

“We spent $300,000 last year to attract 5,000 new guests, who represent a LIFETIME VALUE of three million dollars in revenue. In other words, for every dollar you give me, I’m giving you ten dollars back in gross revenue.”