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 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.
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:
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.
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:
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:
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:
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.)
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.
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:
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.
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.