Average spend per customer is a metric that is most commonly used in hotel food and beverage operations. But it can also be applied to other areas of hotel operations and services. It gives revenue managers an idea of how much each customer spends on varying products and services during their stay, on average. It is also sometimes referred to as Average Spend per Head.
What is Average Spend Per Customer For?
Average spend per customer is used to help hotel and property managers better understand customer behavior. It can take a marketing department the same amount of time to generate a customer, regardless of how much that customer spends. So calculating average spend per customer helps managers target different customer demographics to increase average spend per customer.
Benefits of Average Spend Per Customer
The major benefit of calculating average spend per customer is a better understanding of customer behavior. When broken down by sales channel, time of day, day of the week, product type, or other factors, average spend per customer gives managers a much more holistic picture of how consumers behave at a hotel or resort property.
Limitations of Average Spend Per Customer
The limitations of this metric includes the fact that only successful purchases made for amounts over $0 are included. Also, any refunds or chargebacks issued are typically not deducted when this metric is calculated. Additionally, any revenue made through subscription services are not included in this KPI.
How is Average Spend Per Customer Calculated
Average spend per customer is calculated by dividing the total sales revenue made to date by the total number of customers to date.
Example of Average Spend Per Customer Calculation
Total Sales Revenue To Date = $560,000
Total Number of Customers To Date =1600
Average spend per customer = $560,000 (Sales Revenue) / 1600 (# of Customers) = $350