Where do you invest most of your business time and resources? Many businesses, unfortunately, spend majority of their important resources by focusing on acquiring new customers. While customer acquisition can increase your revenue and brand awareness, results are not significant when compared to customer retention.
Repeat customers hold significantly more value for your business than new customers because repeat customers are likely to bring in more profit for your business. Studies show that about 80% of your future profits are likely to come from 20% of your repeat customers!
Therefore, it is important for businesses to start focusing their efforts more towards retaining existing customers, turning them into loyal customers, and increasing their lifetime business value.
Before we understand the profitability of repeat customers, it is important to define a repeat customer.
What is the meaning of repeat customers?
Frequent customers are those who return frequently to your business to buy more from you. Typically, a repeat customer has made at least two purchases from your company.
Returning customers are also known as recurring or loyal customers because they are loyal to your brand and are likely to make many more purchases from you in the future. Repeat customers become the best advocates of your brand and bring repeat business.
Suggested Read: 5 Benefits of Live Chat Service for Your Business
Why are repeat customers highly profitable for your business?
The first rule of any business is to retain customers and build a loyal relationship with them, and thus avoid the cost of customer acquisition. Not only do repeat customers convert more frequently, but they also have a higher average price than first time buyers. This means that your repeat customers are buying from your store more often.
Nurturing your repeat customers and serving them properly can increase your business profits. Here are some reasons:
Increased Probability Of Next Purchase
A repeat customer has already made several purchases from your brand. Meaning, such customers are already familiar with your brand, they love your services, and have an affinity for your company.
Therefore, it is easier to sell your products and services to repeat customers than new customers. With the same amount of resources, you can generate more purchases using repeat customers.
Frequent Visits Reduce Customer Costs
Getting new customers for your business by promoting your products can be a lot more expensive than selling your products to repeat customers. This is due to obvious reasons such as repeat customers are already comfortable with your brand and prefer their products over their competitors.
Repeat Customers Have A Higher Lifetime Value
In addition to higher conversion rates, repeat customers also have higher average order value than new customers. For each purchase made, a repeat customer is going to spend more money than a new customer, either through upgrades or increased volume of orders.
In addition, the likelihood of a repeat customer buying repeatedly from your brand is higher than that of a new customer. Therefore, promoting new products to repeat new customers takes far less effort than new customers.
Possibility To Refer New Customers
Your repeat customers are loyal to your brand because they have had good experiences with you. Due to this, repeat customers are highly likely to promote your brand by word of mouth or through social media. So the added benefit to your repeat customers is that they refer to many new customers in your business.
7 Proven Ways To Attract and Retain Customers
By now you know how valuable and profitable customers can be for your business. Businesses can strategize to engage customers in such a way that they become repeat customers.
Let us discuss some new ways to retain your new customers and turn them into repeat customers for your business:
1.Provide Excellent Customer Service
The primary goal of any business is to gain a lifetime of loyalty from customers, and this is easily possible by providing a best-in-class premium experience for your customers. And excellent customer service is the most viable way to improve your customer experience.
Here are some ways to provide better customer service.
- Provide live demos and training: It is important to make customers comfortable with their products through extensive training and demos. While recorded training can be helpful to your customers, there is nothing like video chat to clarify all your questions to your customer and be highly satisfied with your brand.
- Live Chat: Do you know that most customers are likely to switch to your competitors after having a bad experience with your brand? You can easily avoid such bad experiences by providing comprehensive support to your customers through personal live chat support.
- Solving problems through co-browsing: Many times, it is not possible to solve customer problems through videos and instructions. For such scenarios, co-browsing can be extremely useful. Through co-browsing, your support team can gain access to your customers' screens and solve any problem within minutes.
2. Automated Customer Conversations
An important aspect of good customer service is round-the-clock availability. Your customers can connect to different time zones at different times of the day, and they will expect you to answer their questions as soon as possible.
How Bots Help Businesses to Serve Better.
- Failure to respond quickly will cause frustration with your brand and a bad experience. You can completely avoid such frustrating scenarios for your customers by providing 24/7 automated customer service. You can automate customer interactions by using AI enabled chatbots for your products and services.
- All you need to do is build customized chatbots for your products with zero coding efforts. Once set, you do not have to worry about churning customers due to lack of immediate responses. Your chatbots will provide quick solutions to most of your customers' problems and queries.
- By using this type of automated interaction and 24/7 availability by improving your customer experience with your brand, you can replicate a larger percentage of customers for your business.
3. Comprehensive Education About Products
Any customer feels empowered and confident about the products only when they understand its full features and benefits. Therefore, without timely customer education and training, your customers are likely to get lost and confused about how to get maximum value from your products.
If you focus on providing high-quality comprehensive customer education, your customers will be very satisfied with your brand and will move around for a long time.
Here are some ways by which you can educate your customers.
- Make the best possible first impression for all your products and services through a comprehensive onboarding process.
- Use all types of communication channels such as blogs, social media, one-to-one live chat, video sessions, and chatbots that are available for every obstacle your customer will encounter during the journey.
- Provide high quality video tutorials and demonstrations so that your customer becomes highly accustomed to your products.
- Start a conversation repeatedly and connect with your customers and tell them that you are always available to educate them through their journey with your brand.
4. Create Customer Loyalty Program
A successful customer loyalty program can contribute heavily towards retaining your customers and turning them into repeat customers. In fact, a customer who is part of your loyalty program is 47% more likely to make another purchase from you than other customers.
The main reason is that loyalty programs have the power to make your customers feel valued, empowered and more connected with your brand. Such a connection provides the right kind of motivation to lead your customers to make more purchases from your company.
Here are ways to increase customer return rate with loyalty programs.
- Offer Attractive Rewards: Offer valuable rewards in your loyalty programs so that your customers move towards opting for your loyalty programs and then make more purchases to earn more rewards. Such a situation becomes a right win-win for both you and your customers.
- Give Customers a Head Start: When starting a loyalty program, try to give your customers a head start in winning points. In this way, your customers feel that they only have to do some more shopping to win prizes which motivates them to buy more.
- Provide welcome points for new customers: By providing welcome points, you are adding value to your customers from the beginning and this will help you to have the number of repeat customers for your business.
- Make it interesting and creative: The more enjoyable a loyalty program is, the higher the retention rate of your customer. Therefore, try to make your loyalty programs more fun through simplification and creativity.
5. Provide Repeat Discounts and Incentives To Customers
Who doesn't like discounts and offers? Everyone does! So if you have not already done so you should start using offers and discounts to retain your customers.
When your margins are tight, offering a discount may not be the best option for your business. However, offering discounts to new customers after their first purchase can prove to be highly profitable for your business.
Delight your repeat customers by following different methods of offering discounts and incentives.
- Offer onboarding offers: During onboarding offers its customers offers such as free shipping or some special discount codes that will give them a great experience with your brand.
- Offers after the first purchase: You have the opportunity to change customers again and again by giving discount codes and special offers to new customers after your first purchase. This will motivate them to buy more from your brand.
- Keep experimenting: Every business and their customers are different. Therefore, experiment with various offers and see what is most profitable for your business by giving you the most significant increase in customer retention rates.
6. Collect Feedback and Update Your Products
Customer feedback is essential for a good customer experience of any business. Without effective customer feedback, you may actually get lost in the search for your customers.
Customer feedback needs to be proactive rather than reactive because most customers are not telling you what additional features they are. It is your responsibility to contact them and upgrade your existing products with feedback.
Here's how collecting feedback can affect your recurring customers.
- Active customer communication: Use various communication mediums such as automated chatbots, in-app messaging and live-chat sessions to gather feedback from your customers, especially new customers.
- Observe common patterns: After gathering extensive feedback from your customers, you need to analyze the feedback and look at common patterns. For example, maybe 60% of your customers feel that your products lack any special feature or add-on service.
- Upgrade your products: Based on the feedback, make the necessary upgrades to your products and services so that they appeal to your customers.
- Inform your customers: After upgrading your products according to the requirements of your customers, tell them that you have done so. Through this, your customer satisfaction index will climb, and churn rates will decrease drastically.
7. Add Value Through Email Marketing
Email can be a powerful tool to drive customers once you make more than one purchase. By strategically strategizing each email you send, you can greatly improve customer retention and thus generate repeat business with many loyal consumers.
Tips for email marketing to add value to returning customers.
- Change your order confirmation email: You can repeat customers by sending your new customers information about related products, special offers and discount coupons along with the order confirmation email of your first purchase.
- Send follow-up emails: After the first purchase, send 1 or 2 follow-up emails to your customers to let them know that you have kept the communication channels open and that they are always welcome to contact you for questions. Make sure all your emails are highly personalized.
- Add immense value: Promotional emails are good, but not always. If you keep bombarding your customers' inbox with sales emails, your emails are likely to come to the trash folder. You should also send emails that add value to your customers in some way or the other.
- Keep your customers updated: Whenever you launch new products or if you have upgraded your products, you should inform your customers via email. This will increase your customer engagement and improve customer experience.
Some Mind-Blowing Statistics About Repeat Customers
Here are some startling statistics about the value of repeat customers for your business:
- Repeat customers are 300% more likely to spend on your business than new customers.
- Getting new customers costs five times more than keeping repeat customers.
- Repeated customers have a 67% higher chance of purchasing your products than new customers.
- The cost is 16x higher in bringing in new customers to the level of repeat customer spending.
- A 5% increase in customer retention leads to 75% increased profitability for businesses.
- On average, a repeat customer exceeds 10x the value at the time of their first purchase.
- 44% of companies focus more on customer acquisition while only 18% of companies focus more on customer retention.
- 62% of customers feel that the brands they are most loyal to are not rewarding them.
Repeated Customers Are Important For Every Business
To conclude, we can say that repeat customers are significantly more profitable for any business, be it B2B or B2C. By directing most of your resources towards customer retention strategies, you can skyrocket the revenue and profits of your business.
The most important strategy for converting new customers into repeat customers is to provide the best possible customer experience and support. Through enhanced customer experience strategy, you can maximize your leadership to repeat customer conversion rates.
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