Every businessman is waiting for the customers, and they have a dream that their products get sold uninterruptedly. They always believe that when the goods are sold, the work is done. In reality, the work starts after that. No business is successful in selling a product to a customer once, but the success of a business is in that customer buying your product again and again. Hence the importance of repeat purchases in business. Repeat purchases occur when customers buy the products or services they have previously purchased or purchase another item from the same store or platform. In a way, repeat purchases show customer loyalty to a brand.
All customers are important to a business, but if you had to choose between retaining existing customers and acquiring new customers, which would you choose? Obviously, we will try to retain existing i.e., repeat customers. This can also be a golden opportunity for a brand or business to establish long-term relationships with customers, as this allows the business to ensure that customers continue to purchase their goods or services. Repeat customers have different buying habits than new customers. For example, in the case of e-commerce businesses or in the case of retail stores, repeat customers are already familiar with the e-commerce interface, and therefore go directly to the product they want to buy, shop, pay and check out. New customers, on the other hand, take their time browsing the e-com platform or store, exploring different products, and comparing prices. This means that encouraging repeat purchases can increase a company’s overall profits. Today, it is important for businesses to not only understand the importance of increasing their repeat customer rate but also think about how they can increase that number. As you increase your repeat customer rate, you will not have to spend humongous money on acquiring new customers. Other benefits of this customer include:
Repeat Customers Have A Higher CLTV (Customer Lifetime Value) – With each purchase, a loyal customer will spend more money than a new customer through repeat orders or upsells because they have built up their trust in you. That is why it takes less effort to convince this customer to buy your new products than to convince new customers.
Repeat Customers Spend More – Not only do repeat customers buy more of your products, but this is evident if you average the value of their purchase as compared to a new customer. Data of the number of previous purchases and how long they have used your products/services will show you how much they have contributed to your business.
Repeat Customers Will Promote Your Business – Along with increasing sales, repeat customers will advertise your business through word-of-mouth, which will help you increase your clientele. The more a customer purchases, the more likely they will refer their friends and family to you. This is possible when they have experienced excellent customer service from you.
Acquiring New Customers Is Expensive – When you budget for advertising promotion, it will take more effort and cost to acquire a new customer and turn them into repeat buyers. Therefore, it is wise to spend a good portion of your budget on repeat customers as they can bring you more revenue.
Additionally, repeat purchases can help you drive your business as it will help you identify loyal customers, know which products and services sell best, and streamline your stock management and investment. Finally, as seen above, focusing on such specific products and services will help in planning marketing strategies and activities.
Now the question becomes how to create repeat customers or how to retain them. So, following can be thought of. Normally you would send a nice message to any customer who makes a purchase, create a separate message for this customer that makes them feel special. If new products are being launched, then inform them first or keep premium display only for such customers for few days. If they regularly buy certain products at certain intervals, remind them by texting or calling as soon as that time comes.
Everyone loves a discount. Many a times, it becomes the reason that customers buy different products and then try to become repeat buyers. So, give them an offer like a bonus upgrade, extra samples, loyalty points or store credit to motivate them. As mentioned above, if they are happy to talk about you in their circle, then you can make them a part of your referral program. Things like loyalty points, discounts, cashback, gift vouchers can be given.
Flowers or cakes can be sent to them on their special day. Loyalty programs play an important role in this matter. Take their feedback regularly and make changes accordingly if find merit in it and let them know that it has been implemented. Stay in touch with them constantly through email and messages. Don’t give them time to think of another brand. S/He should feel that this brand or merchant understands me especially. Give them great service, make their shopping experience memorable, such gestures will make them respect your brand more and stick with it forever.
It is often the case that businesses miss the hidden profits in their existing customers by focusing only on winning new customers. Keep in mind the 80/20 rule to grow your business. 80% of business usually comes from 20% of customers and these 20% customers are repeat customers. If you have not checked your data of where the business is flowing, check it and understand which customers, new or repeat, have had a hand in the success of the business to date.
This article was originally published in Mumbai Samachar – a leading Gujarati-language daily newspaper published in India. This article has been written by Mr. Sameer Joshi, Founding Partner – Sam & Andy.