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Business Tips

Don’t Overlook Your Customer’s Lifetime Value

By July 19, 2023July 23rd, 2023No Comments
NAWBO DC - Business Tips - Don’t Overlook Your Customer’s Lifetime Value

NAWBO DC – Business Tips – Don’t Overlook Your Customer’s Lifetime Value

True story. Friends of mine were given a $25 gift certificate to a local restaurant—pre-pandemic—by a couple who had raved about its authentic Italian food. They wanted their friends to try it.

Because of the pandemic, the friends did not feel comfortable using the gift certificate at the time but thought it was now safe to eat out again. They took the gift certificate and went to the restaurant, arriving at an empty restaurant Thursday evening. Before sitting down, they wanted to verify the certificate was usable, since its expiration date had passed during the pandemic. They explained they were just now comfortable going to restaurants again and hoped the restaurant would accept the certificate. They were dying to try a special dish their friends had loved.

They stood in the lobby while the certificate was passed from greeter to manager, then taken into the back. The couple then was told the manager had to call the owner for approval. More than 20 minutes later, the couple received their answer: no, the restaurant would not honor the gift certificate. Discouraged, and tired of waiting, the couple left.

Besides the issues that nobody in the restaurant had the authority to make the decision, and the couple had to stand and wait, the restaurant already had the money from the certificate purchase. And while they had the right to refuse the certificate, they missed a huge opportunity…the lifetime value of a customer.

They overlooked the fact that if this couple had a good experience, they would return again and again. If the couple paid $70, monthly visits then added up to $840 a year. In five years’ time, that meant $4,200 spent…or more, not including friends they would have brought in or referred. The goodwill and lifetime value certainly would have covered the certificate…and much, much more.

What do you think…was the refusal of a $25 gift certificate worth it? What are your customers’ lifetime values and how are you nourishing those relationships?

Article submitted by NAWBO member Linda Barrett, a former corporate director of marketing and owner of All the Buzz Creative, offering Clio Award-winning copywriting, marketing and PR services.