You run a sale and generate some new customers as a result, and you’re ecstatic. And you should be—new customers are always a good thing.
But what are you doing to keep those customers coming back? You worked hard to acquire them, and you are missing a huge opportunity if you leave it at that.
Companies often think acquiring new customers is their most important objective because there is an assumption that those customers will keep coming back. But think about some of your own examples as a consumer. You’ve likely made purchases and can’t even remember where you bought them. Or maybe you just don’t feel any loyalty to the company you purchased it from because you don’t have any reason to.
Just because a company sells a decent product or service at a decent price doesn’t mean new shoppers will turn into loyal customers. It takes some nurturing.
Customer Retention Strategies Are Where It’s At!
When we focus more of our marketing efforts on retaining our existing customers, we increase our profitability and the lifetime value of our customers. Let’s break down just what that means for the success of a small business.
Here are 3 reasons why repeat customers are the key to success…
Conversions Are Easier
Since you are selling to people who have already purchased from you, converting them again is that much easier. If you’ve done a good job in the past, then you’ve already gained their trust.
According to smile.io, customers who make an initial purchase have a 27% chance of making a second purchase, but if they do make a second and third purchase, they then have a 54% chance of making another purchase. Paul Farris, the author of Marketing Metrics, claims that a repeat customer has a 60-70% conversion rate.
Those statistics are pretty incredible when you take into account that the average conversion rate is between 1% and 3% for new customers.
Profits Are Higher
Return customers are often less focused on getting the cheapest price and are more likely to purchase from you if you have gained their trust and you make it easy for them to buy from you. Plus, they are more likely to make larger purchases through upsells and cross-sells than first-time customers.
The proof is in the statistics:
- A study by RJMetrics indicated that the top 10% of a company’s loyal customers spend 3 times more per order than the lower 90% of customers. Furthermore, the top 1% spend 5 times more than the other 99%.
- Bain & Company analyzed the costs and revenues associated with new versus long-term customers, and they found that “increasing customer retention rates by 5% increases profits by 25% to 95%.”
Costs Are Lower
Repeat customers bring companies even more revenue through user-generated content. They are more likely to share information about your products and services and share their satisfaction through word-of-mouth advertising, thereby reducing marketing costs considerably.
Here’s a great example of this: CEO Meg Whitman recently told the Wall Street Journal, “If you just do the math off our quarterly financial filings, you see that we’re spending less than $10 to acquire each new customer. The reason is that we are being driven by word of mouth.”
5 Customer Retention Strategies That Get Results
Clearly, retaining customers is much more profitable and less costly than striving to acquire new ones, so let’s look at 5 customer retention strategies you can use in your small business to keep your customers coming back.
1) Use Chatbots & Live Chat for Outstanding Customer Service
You know those little windows that pop up where you can type in a question when you go to a website? Those are called chatbots. When you type in a question, it doesn’t go to a live person. Instead, it uses artificial intelligence to answer simple questions, and once it gets too complicated for the chatbot, it passes it on to a real person.
This is a great way to convert new visitors into customers, but it is also a great way to settle complaints and resolve questions and issues that your existing customers have.
You can turn one-time purchases into long-term customers with a live chat feature by helping your customers get more out of their purchases and notifying them about new products and services.
2) Create a Reward Program
Rewards programs and customer loyalty programs are one of the most effective ways to encourage loyalty from your customers. You’ve probably experienced this as a customer yourself. It can almost be a fun game to try to earn that next reward and get free stuff.
Perhaps your customers can earn points each time they make a purchase, and when they acquire a certain amount of points, they get to choose a $15 product for free. Maybe it’s when they get to a certain amount in purchase dollars or transactions. You can even use automated loyalty apps to make the process a snap.
TIP: Don’t make it too difficult to earn rewards because that is a sure-fire way of sizzling out their excitement to buy.
3) Use an Email Retention Program
Even though email is a crowded space these days, it’s still working. But don’t abuse your subscribers’ inboxes with junk that no one wants. Instead, stand out as the company whose emails are fun and exciting to receive. How can you do that? Here are some ideas:
- Send them unexpected gifts and make it feel like a present, such as having them click on an image of a gift box to reveal it.
- Send them information that will make their purchase more useful for them.
- Make a game of it by sending them badges and awards that they’ve unlocked for taking certain actions.
- Make them feel special with subscriber-only sales.
- Send them recommendations for products they might like based on what they already purchased.
- Ask them for feedback and reward them for it.
TIP: It’s important to use software that can segment your subscribers so that you can personalize their emails according to what they would like and how engaged they are with your company.
4) Set Up Customer Accounts
Customer accounts are great for repeat customers because they offer an easy way to reorder and make purchases without re-inputting contact and payment information. For you, it helps you to personalize their shopping experience.
There is also a downside to customer accounts when it comes to new customers, however, because it can feel like a burden or something they don’t want to commit to upon an initial purchase.
You need to maneuver between this fine line so that you don’t turn off new customers and still increase customer retention. So, instead of requiring your visitors to set up an account when they make a purchase, you can invite them to set up an account after their initial purchase is made. You might even entice them with a gift or coupon.
5) Think Outside of the Box
Everyone gets tired of the same old, same old. And unless you manage to stay on the cutting edge of every new marketing technology out there, your efforts will often be somewhat redundant in your customers’ eyes.
While being on the cutting edge can make a great impression, sometimes being a little more old-fashioned can make you stand out even more. For example, since none of your competitors are writing hand-written letters to their customers, doing that would certainly make you stand out.
Don’t leave anything off the table. Think uniquely and creatively. Do what you can do to be different, and your customers will often reward you with their loyalty.
When it comes to profitability and cost reduction, customer retention is where it’s at! Customer relationships are no different than any other relationship. They need to be courted and nurtured if you want them to stick around. Get started with at least one of these customer retention strategies today so that you can turn more of those one-time purchases into loyal customers.