The Differences between Loyal Customers & One-Off Shoppers – and 5 Ways to Retain Business
Are you more focused on customer acquisition than customer retention?
It’s time to change your strategy.
The most successful businesses are those with a solid core of loyal customers. Their time – and a large chunk of their marketing budget – is spent nurturing the relationship with their existing customers. They understand that 80% of their future profits will come from just 20% of their current customers. They don’t go looking for new revenue, because it’s right under their nose.
By pouring their efforts into creating loyal customers, these businesses leap ahead of the competition.
Want to know more? In this article we’ll lay out the key differences between loyal customers and one-off shoppers and show you why retaining business is more important than ever.
Loyal vs. New
The differences between a loyal customer and a one-off shopper are huge. Shifting your focus from customer acquisition to retention can have a profoundly positive impact on your business. Here’s why:
Loyal customers cost less and spend more
It’s really quite simple: companies will spend 5-7 times more on acquiring a new customer than it costs to keep an existing one.
Customer acquisition is expensive, frustrating and often fruitless. That money is better-spent elsewhere.
In addition, loyal customers are worth a huge amount to businesses. Up to 10 times as much as their first purchase, according to stats from the White House Office of Consumer Affairs.
In short, loyal customers are infinitely more profitable than new customers, as demonstrated in this excellent example by Ohad Hecht.
They are easier to sell to
Launching a new product? Promoting a sale? Looking for a remedy to a mid-month slump? Sell to your existing customers!
There are some pretty compelling stats to back this up. According to research conducted by Market Metrics, the probability of converting a new customer is just 5-20%.
In contrast, the probability of converting an existing customer is much, much higher at 60-70%. Pretty good odds, right!?
Loyal customers talk
This is where the parallel universes of customer retention and customer acquisition meet.
Since satisfied customers will tell, on average, nine other people about their experience, loyal customers can be key players in acquisition!
Word-of-mouth is a hugely beneficial – and low cost – marketing tactic. Keep existing customers talking about you (for the right reasons) and you’ll see a natural increase in new clients.
This brings us neatly to the next chapter in this saga: essential strategies for retaining customers.
Five Fool-Proof Retention Strategies
Now you know why you should retain customers, it’s time to find out how.
1: Stay in Touch
Regularly communicate with your customers in ways that resonate with them.
If they’re avid Tweeters, make sure you have a strong presence on the platform. If they prefer old-school methods of communication, send them a letter.
Send personalised emails or mail-outs letting them know about special offers or a product they might like. Engage with them on social media. Text them, if you have their permission to do so. Just don’t let them forget about you.
2: Outstanding Customer Service
A lot of companies talk the talk but don’t walk the walk when it comes to customer service. Beat the competition by offering the best service you can, at all times.
A few simple ways to provide a service that will blow customers away:
· Be available when they need you: answer calls and emails really quickly – even if it’s just a courtesy note to say you’re investigating their question/problem etc.
· Be flexible. Is the company’s returns policy more important than customer retention? Can you bend the rules just this once? Will you price match?
· Be authentic. Do away with stock responses and scripts. Listen to your customers and respond as a human, not a corporate machine.
3: Loyalty Rewards
Everyone loves a freebie!
Set up a loyalty programme to entice customers to continue shopping with you. Customers could collect points to redeem against purchases, or receive a free gift with every Xth order.
There’s a reason why so many big businesses run loyalty schemes (Waitrose, Marks and Spencer’s, Boots et al) and it’s because they work!
4: Know Your Product
This is important for two reasons:
The first reason benefits the business as a whole. Knowing your product allows you to understand what’s selling well, who’s buying it and where improvements can be made.
The second reason is more customer-focused. Customers will come to you with their questions about your product. They will expect you to be an expert, to know all the ways in which the product can work for them. If you don’t meet this expectation your customers will go to someone who does.
5: Be Reliable
Is there anything more frustrating than an empty promise?
Reliability is very important to consumers. They want to know that the product will arrive on time, the service will be faultless and that any issues are swiftly dealt with. They expect you to honour warranties and returns policies.
In short, they want transparency and honesty from the companies they give their hard-earned money to.
If you can deliver all this - and more - your customers will stick by you.