Grow your business by increasing the number of times customers return
In the last issue we discussed the first of the 4 ways that you can grow a business - increasing the number of customers of the type you want to have. This month we discuss the second way, increasing the number of times customers come back to buy from you.
Chasing new customers versus encouraging repeat business
It's a simple fact of business - most companies are obsessed with getting new customers. They advertise, plead, bend over backwards and sometimes beg to get a new customer.
And after all that, once they get them, they ignore them.
Think about this. It can cost up to 6 times more to win a new customer than it does to have an existing customer purchase again. Why? Because you invested time and money to acquire that customer for the first sale, but every additional sale after that doesn't involve any extra acquisition cost. So for every sale you make to an existing customer you actually keep more as profit.
In other words, it 's a well recognized fact that retaining and having customers come back for more - and more - is the most profitable way to sell.
So how can you encourage repeat business?
Know your best customers and treat them well
One of the first ways to ensure repeat business is to classify your customer base into tiers according to how profitable they are. This can be as simple as categorizing them as A, B, C and D customers. This classification process means that your ongoing communication and marketing approach will be more appropriate for each group. For example, your A customers are the ones you most want to keep working with, so you might invite just them to join a preferred customer club, or As and Bs would get special treatment. On the other hand you could raise the prices for your D customers to better reflect their true costs to your company. They may go elsewhere but that is acceptable if you can focus your resources on your best customers. A thoughtful, well designed customer classification program is an important factor to improving your profitability.
Provide awesome service
Creating a team commitment to service can impress your customers enough to keep them returning and referring others. The commitment could make certain promises of performance standards and could explain your business ethics and mission. These can make great unique core differentiators as well.
Awesome service, like good telephone technique and selling technique, can actually be systemized so all the team knows what they are expected to do for a customer and just how far their authority extends in bending the rules. You can't stop at saying you want your customers to be given awesome service - you need to train the team so they can deliver it consistently and effectively.
Nurture your customers
It's important to nurture your relationships with your customer in the same way you would any other important relationship. Nurturing is the most cost effective way to make customers feel valued and motivated to keep purchasing from you. The more you stay in touch with them and provide extra value the more likely they are to remember you.
Use customer comment
Asking for feedback lets customers know that you are truly interested in them and their opinion - something other businesses just may not bother with. And the feedback you get can be extremely valuable for your strategic planning.
Follow-up calls just to make sure they are happy with their purchase or to get in with some damage control if they are not; satisfaction surveys; customer advisory boards - all can be very useful in encouraging repeat business.
When you do make the effort to gather feedback, and the customer has made the effort to give it to you, don't waste it. Use the information to continually improve the way you do business, and let customers know that their suggestions are being used.
Article published with permission from Ran One
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