Fred Abaroa

I was on a panel for the Portland Music Foundation on "You Band, Your Brand" this last week. Since then I have had several questions on how I came up with the value of a customer. So get your slide rule ready and lets hit it.

The formula is rather simple but you need to do some prep work to fill in all the blanks. Here it is:

A. Value of an Average sale (divide annual sales in $s by number of transactions)
B. Number of transactions each regular customer makes annually
C. Average number of years a customer buys from you
D. Average number of referrals/recommendations a customer makes annually
E. Sales per customer per year (A*B)
F. Sales per customer over a lifetime (E*C)
G. Potential gross sales from referrals (F*D)
TOTAL VALUE OF CUSTOMER (F+G)

Pretty easy huh! For B and D you need to create a survey. Then you need to administer the survey. First here is the survey I put together for Costa Vida South Portland.

How often do you eat at the following types of restaurants in the past month?

• Fast Food (Mc Donalds, Taco Bell, etc) 0 1-2 3-4 5-6 7-8 9 or more
• Fast Casual (Panera, Costa Vida, etc) 0 1-2 3-4 5-6 7-8 9 or more
• Full Service (Outback, Applebees, etc) 0 1-2 3-4 5-6 7-8 9 or more

In regards to Costa Vida Fresh Mexican Grill, How often have you done the following in the past month?

• Dine in for lunch 0 1-2 3-4 5-6 7-8 9 or more
• Take out for lunch 0 1-2 3-4 5-6 7-8 9 or more
• Dine in for dinner 0 1-2 3-4 5-6 7-8 9 or more
• Take out for dinner 0 1-2 3-4 5-6 7-8 9 or more
• catered/delivered to your office 0 1-2 3-4 5-6 7-8 9 or more
• recommend Costa Vida to a friend 0 1-2 3-4 5-6 7-8 9 or more
  

The following Questions are for demographic purposes only:

• Gender
• Ethnic
• Background
• Age range
• Which best describes your occupation?
• Annual pre-tax household income
• Marital status

Not a big deal but enough information to know my customers better. The way I administered the survey may be the key. I tried sending it via email to my locals group. But many did not answer. So with clipboard in hand I went up to random customers and just asked. At the Portland Music Foundation I suggested that the band get a roadie to go amongst the fans before the show to take the survey.

Ok there it is in a nutshell my secret to the $40,000 Customer.