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Where do you focus your business activities: bringing in new customers or keeping your current ones? Both types are important for companies, but retaining existing customers reigns supreme.  Prospecting for new customers is important, asking for referrals is important, but repeat business is essential. If you need reasons why you should concentrate on repeat business, as well as leads and referrals, here are some statistics:

  • Loyal customers bring in sales up to ten times as much as their first purchase – (1)
  • The cost to acquire new customers can be five times greater than the cost to keep current ones – (2)
  • A five percent increase in customer retention can increase a company’s profitability by 75 percent – (3)

How to identify a repeat customer

Companies can use customer data to identify a repeat customer. Customer loyalty metrics such as customer lifetime value, customer retention rate (4), and repeat purchase rate are data points to consider.  But there are also some simple and easy methods as well such as:

  1. Asking for a phone number or email address.
  2. Creating customer accounts with user profiles to track logins.
  3. Using mobile apps, ideally with geo-fencing.
  4. Utilizing vouchers, loyalty cards, or incentive offers for repeat customers only.

Why are repeat customers important?

  •  Repeat customers drive steady revenue

Loyalty means customers are less likely to move their business to a competitor so that you can feel more confident about the incoming money stream.

  • Repeat customers build stronger relationships

Repeat customers are often easier to close a sale because of their relationship with you. They feel confident you can deliver on your promises.

  • Repeat customers result in word-of-mouth marketing

Happy customers recommend you and your product or services to friends or colleagues. They will also build you up on social media.

  • Lifetime value

Repeat customers generate more value over their lifetime with you. They will continue to try new offerings, products, or services based on their relationship with you.

Six ways to gain repeat customers

  1.  Be helpful

Almost half of your customers would switch to a competing company after one bad customer service experience. (5) Customers want to be happy, and you can accommodate them.  Help them to solve their problems and answer their questions—even the most unconventional ones.

  1. Create a memorable experience

A top metric for marketers is brand recall. Brand recall is the ability of people to recognize and associate your products and services with your brand. You can cash in on this recall by creating memorable experiences that set you apart, such as savvy social media posts or bold marketing campaigns.

  1. Give customers more choices

It feels good to have options. Businesses need to give customers the luxury of choice.

      4. Act on customer feedback

It is necessary to have a customer feedback mechanism in place to encourage repeat buying.

  1. Do something good in the world

Customers are increasingly expecting brands to take a stand on relevant social issues. And yes, this affects customer behavior.

  1. Invest in retention strategies(5)

A loyalty program and good customer service can help you get the most value from your existing customers.

Repeat business

New business is the first-place prize between companies competing for the same customer. Each company wants to acquire a larger market share before its competitors. A new customer is a triumph. However, a repeat customer is essential to long-term business success.

There’s mounting statistical evidence that shows that customer retention is king. For instance:

  • It costs 5 to 25 times more(6) to acquire a new customer than to retain an existing one.
  • If the customer retention rate increases by five percent, it will increase profits (7) by more than 25 percent.
  • In the U.S., the estimated cost(8) of customers switching companies because of bad customer service is $1.6 trillion.
  • You have a 60 to 70 percent chance of selling(9) to an existing customer, while the probability of selling to a new prospect is only five to twenty percent.
  • About 65 percent of a company’s business (10) comes from existing customers.

When companies recognize the benefits of a solid customer retention program, create one, and adhere to it, they will see both lifetime customer value skyrocket and revenue skyrocket.

Uncertain times call for creative thinking. Contact Gavel International to be inspired with solutions that connect and engage your people.
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SOURCES:

  1. https://blog.fivestars.com/26-statistics-that-prove-repeat-business-is-where-its-at/
  2. https://blog.fivestars.com/26-statistics-that-prove-repeat-business-is-where-its-at/
  3. https://blog.fivestars.com/26-statistics-that-prove-repeat-business-is-where-its-at/
  4. https://www.zendesk.com/blog/calculate-customer-retention-rate/
  5. https://www.zendesk.com/blog/zendesk-customer-experience-trends-report-2020/
  6. https://www.zendesk.com/blog/customer-retention-strategies/
  7. https://media.bain.com/Images/BB_Prescription_cutting_costs.pdf
  8. https://newsroom.accenture.com/news/us-companies-losing-customers-as-consumers-demand-more-human-interaction-accenture-strategy-study-finds.htm
  9. https://www.forbes.com/sites/patrickhull/2013/12/06/tools-for-entrepreneurs-to-retain-clients/?sh=5541351c2443
  10. https://www.dnb.com/content/dam/english/business-trends/ebook_anticipate_customer_needs_pt2_retention.pdf

 

 

Jim Bozzelli
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