You take a break from work to run out and get a coffee. There are two coffee shops near you: Winston Brews and Sweet Pea Cafe. You’ve been to both and know you’ll get the same quality of coffee at each, but the barista at Winston Brews gave you a punch card. You get your card punched with every cup you buy; turn in a card with five punches and you get a coffee on the house. Which cafe do you visit?
Winston Brews knows a valuable secret: customer retention costs less than acquisition. Many businesses get caught up in trying to make new customers and forget that it’s easier to sell to familiar faces. In this case, all Winston’s needed to do to convince you to come back was order some custom cards and a hole puncher.
Building a base of repeat customers isn’t always that simple, but research shows that it is profitable. According to a study by Invesp Consulting, the success rate of selling to a new customer is 5 to 20 percent, but selling to an existing customer has a 60 to 70 percent success rate. The study also found that existing customers are more likely to spend more money (31 percent) and try new products (50 percent). Retaining just 5 percent more customers can increase your profits between 25 and 95 percent!
So what can you do to turn new customers into repeat customers? Here are a few ideas to get you started:
Who are your customers, and what do they want from your business?
It may be helpful to build personas, “fake customers,” based on the information you’ve accumulated about your buyers. This can include their age, their interests, how they interact with your company (on social media, through email, or in person, for example), how often they visit your website or store, and their purchase frequency. Personas tie your data to reality and help your business better target its clientele.
What do you know about the product you’re selling?
If you’re not already, become an expert on your product. Make sure your customers know they can come to you with questions about your product or field of expertise. If they know you’re knowledgeable and can give them the answers or service they need, they’re more likely to continue to buy it from you. On the flipside, find out what your customers know by giving them the ability to share their positive experiences with their peers through a review and feedback system. This makes their engagement with your brand a two-way street.
When can you make a second sale to a customer?
Your goal is to make it as easy as possible for your customers to continue to choose you. Winston Brews used a physical loyalty card that rewards customers for continued business. Online membership programs, basic apps, and coupons can serve the same purpose. If you have an online store, giving your customers access to a wishlist can also give them the nudge they need to come back and buy more from you.
Where can you find your customers?
To keep your name in their minds, you need to find out where you can put it in front of their eyes, and that means being a part of the online communities in which your customers are participating. Targeted social media campaigns can connect you with your customers, while email marketing lets you keep them informed and updated directly. If you’re a brick-and-mortar business and don’t already have an online presence, both new and repeat customers may not know where to find you.
Why do customers prefer your brand to others?
It’s your winning smile, isn’t it? Improving on your customer service can directly impact retention, be it in your store or online. As we discussed in a previous article, chatbots can bring interactive service to your website. Identifying your customers’ values can help you build a relationship with them. Are your customers environmentally conscious? Are they fans of the local baseball team? If you share those values, they may identify your brand with the things and ideas they support.
There are a myriad of ways to keep customers coming back and no single method is the right one. But with these tips in mind, you can build loyalty and see new customers return again and again.