Customer Retention

Keep 'em Coming: Why and How to Create Repeat Customers

September 3, 2020
12:00 am

New business is the prizes of war between competing companies  – each aims to get a bigger market share and expand their customer base before their competitors. But, while a new customer is indeed a triumph, a repeat customer is the very epitome of business victory.

Think about it this way: customers nowadays very often sample products or try out services in an effort to find the best. That doesn’t mean they have any intention or feel an obligation to keep buying from you. They will only return if you successfully engage them, both in terms of customer service and product quality. 

And if they do come back, that’s all the proof you need that your business is doing something right.

The stats are on repeat

The idea that returning customers are equally, or even more, valuable than new ones has been coming up regularly for several years now. There’s a number of repeat customer statistics that show this, for example:

And there are many more retention statistics like this that indicate why repeat customers are important. Besides, sales techniques like cross-selling and upselling wouldn’t exist if companies didn’t understand the economic value of customer loyalty.

How do you create repeat customers?

There are lots of factors at play in customer loyalty and retention and all of them can make a difference in the customers’ purchasing behaviour. Here are five methods to consider:

1. Sell what customers need

Most companies think about how to engage customers so they return for more. But, let’s take a step back for a moment. Shouldn’t a company first make sure that the customer’s needs are met by the products or services they provide? 

After all, a customer might like your brand, but they won’t keep buying if you don’t offer them exactly what they want.

So, consider how you match your offerings to customer personas. In B2B, you have many opportunities to assess your potential to solve a customer’s challenges (e.g. pre-contact research, cold call, discovery call). In every stage, your sales team needs to understand whether they can truly provide a relevant solution. (This is an important sales best practice).

In B2C, segmentation and research are critical. Product research should take into account trends and feedback from customers to improve the products. Marketing can also play a role by matching advertising techniques (e.g. PPC) to the right audience.

2. Offer excellent customer service

This might be one of the most important factors for creating repeat customers. According to the American Express Global Customer Barometer, about 52 percent of Americans and 66 percent of Singaporeans (Singapore being an emerging market for many industries) did not complete a business transaction or make a purchase because of poor customer service.

On the other hand, the same research shows that about three quarters of US respondents are willing to spend 17 percent more based on excellent customer service.

So, make efforts to improve customer service, in terms of speed, quality, and friendliness. To do all this:

  • Provide effective self-service options. When your team is away, who will help customers? A well-designed knowledge base and a helpful automated AI assistant (e.g. a chatbot that’s accessible from your website or an app) are great ideas to try. Of course, it should be easy to contact a human agent if self-service proves inadequate.
  • Train your agents. In a fast-paced environment, many companies don’t dedicate enough time to training. And that’s a mistake, because 30 percent of people think a friendly and knowledgeable agent is the most important aspect of customer service. A thoughtful training program should be top priority. 
  • Make sure you know your customers. Customers connect with your brand in a variety of online places and mediums (email, website, live chat, social media, etc.). And, the majority of people expect the rep they talk to to know their contact, product, and service/information history. The good news is that there’s an easy solution for that: choose a customer engagement platform that has unified view capabilities.
  • Think about every touchpoint and make it better. Before customers actually talk to you, they may have several other interactions with your brand. Try to think how to optimize the entire customer journey. For example, an unattractive website may cause people to lose trust in your company, so maybe a redesign is in order.

3. Take feedback and do something about it

Customers look at brands more favorably if they ask for the customer’s feedback. And that’s a natural psychological response – who doesn’t like being with others who listen to them and take their thoughts (and complaints) seriously.

So, it’s a good idea to:

  • Respond to and resolve complaints and feedback. Whenever a customer sends you a complaint, take notice. If they’re right, what can be done to de-escalate the situation? Sometimes, there’s nothing else you can do other than offer a sincere apology. And that’s good: according to a study, when a business said sorry on top of offering compensation, the percentage of satisfied customers increased from only 37 to 74 percent. 
  • Appreciate positive feedback. Occasionally, customers will go out of their way to praise you. This expression of the voice of a customer isn’t something to take lightly. Send them a thank-you email, offer them a discount, do something that shows your gratitude. Your repeat customer may even be willing to share their feedback on a review site and help you get new customers.
  • Ask for feedback proactively. Whether by a simple email, or an official NPS or CSAT survey, asking for feedback is important. It makes your customers feel valued and provides you with material to shape your future initiatives and improve. It almost goes with saying that you should always act on feedback you receive, instead of letting it collect the proverbial dust.

4. Personalize whenever possible

Personalization is a key buzzword for almost all business functions and businesses are prepared to spend large budgets on it. It perhaps comes as no surprise that 48 percent of consumers expect specialized treatment for being a good customer and 33 percent of consumers who ended their relationship with a company did so because the personalized experience was lacking.

A few examples of personalization include:

  • Relevant offers and discounts (e.g. based on purchasing history)
  • More effective support (e.g. “I see you faced the same issue last month, maybe we should explore an alternative solution”)
  • Addressing customers by name (e.g. “Hello Sami”, instead of “Dear Customer”)
  • Sending them ads and promos tailored to their needs (e.g. sending a discount for a lawn mower to someone living in a block of flats in the city center will probably be met with dissatisfaction).

However, personalization gets even more complicated as time goes on. We’re now in the realms of “hyper-relevance” of services (for example, sharing compelling content that fits the specific habits and behavior for each buyer persona, not just their demographics or their job). You can achieve this by having a targeted strategy for understanding who your customers are and what drives their behavior (most often using big data, predictive analytics, machine learning, etc.)

5. Appreciate every repeat customer

Some customers become repeat customers without any encouragement from you – they just liked their experience the first time and came back for more. This doesn’t mean you should take them for granted.

Repeat customers need to be, at the very least, acknowledged for putting their trust in you. Even if it’s just an automated message that goes out to a customer after they complete their second or third purchase, letting them know how grateful you are can go a long way.

On the more tangible side, discounts, gifts, and other offerings are good options to consider for repeat customers. If you are in B2B, you can also collaborate with customers on various projects, like events, webinars, case studies, and more. In B2C, interacting with customers who post about their experience on social media can also strengthen engagement.

How to measure repeat customers

So, how do you know if your efforts have succeeded? How many repeat customers are enough (or are they ever enough?). This is a question for data analysis.

To measure repeat customers and their behavior, you can look into multiple metrics, like:

  • Repeat customer rate
  • Customer attrition (churn) rate
  • Customer retention rate
  • Purchase frequency

Here’s how to calculate the customer retention rate of a particular period:

For example, imagine that you have 100 customers on January 1st. During the month of January, you gain 40 more, but you lose 20. Your customer retention rate at the end of January is [(120-40)/100]*100 = 80%. (Check out the impact of revenue retention metrics to understand the full implications).

The repeat customer rate is a bit more straightforward:

Notice that finding the number of returning customers requires you to go through customer data to identify which customers have purchased from you before. This number is easier to find if you’re using a software that keeps track of purchases of customers automatically.

You need repeat customers more than they need you

With a wealth of options and information out there, customers are better-equipped than ever to switch brands at the blink of an eye. 

But, it doesn’t have to be this way. You’ll know when you’ve done an amazing job in engaging customers when it becomes unthinkable for them to go anywhere but to you. 

Just make sure you get to know and listen to your customers, appreciate them, and aim to make their life easier. As they say, “a happy customer is a repeat customer.” Make this your goal and measure the results – and when you get it right, all the effort will be worth it.


Related Articles