Companies are cracking the code for repeat customers. Are you?
For any business the key question is profitability. This comes from deciding where to focus on. Most businesses are so busy strategizing and targeting new customers, that they forget the potential in store from their existing repeat customers.
Research by Adobe shows that average revenue per visit increases exponentially with each repeat visit and repeat customers already account for significant chunks of revenue for online businesses worldwide (41 percent of total online revenue in the U.S.- even though only 8 percent of U.S. customers are repeat customers). Another interesting statistics from Marketing Metrics states that the probability of making a repeat customer buy a product are between 60-70 percent, whereas the chances a new customer will buy your product ranges between 5-20 percent. Thus, highlighting the massive potential from a repeat customer.
Once customers have used your product a few times and had no problems with it, the likelihood of them spreading a good word about your business goes up. Without any effort from your end, a satisfied repeat customer will happily tell their social circle about how wonderful your product/service is and how they had a great experience. Certain industries like technology and restaurants enjoy higher levels of advocacy than others- but in general, having a customer “market” your brand free of cost is the most ideal scenario for any business.
Another important point to note is, loyal customers do not just buy more from you; they buy less from your competitors. In a study by Zendesk, 54 percent of customers said they would increase the amount of business they do with a company in return for loyalty rewards. 46 percent claimed to have already done that.
Companies are realizing the importance of focusing on their repeat customers and designing special loyalty and rewards program exclusively for this category of customers.
Let’s take the example of UK’s broadcasting giant Sky, last year they started catering to some of their longest serving customers by providing them with free broadband upgrades, sneak peaks at some TV shows with the Sky VIP loyalty program.
New customers, instantly, join on the Sky VIP Silver tier. After 3 years they slide up to Gold until they’ve been loyal for eight years. Customers with eight to 15 years subscriptions are Platinum members. Those crossing 15 years come in the Sky VIP Black tier.
VIP Sky members can get their hands on some happening events including: access to prize draws for experiences including a trip to Iceland to see the filming locations for Game of Thrones. Free tickets to sporting events including the Premier League and EFL, international and domestic cricket, Autumn Internationals etc. as well as exclusive Sky sports events where customers get VIP treatment and hospitality. Free tickets to exclusive cinema preview screenings, tickets to other events across UK. They are offering experiences to their loyal customers, something that goes way beyond the tactical rewards, after all money can’t buy everything.
This move by Sky is not only encouraging for new customers to join, but more than that it’s a great way for a company to thank its most loyal repeat customers.
Looking at it from another important angle that can’t be ignored is costs, nurturing your loyal customers can help curb your costs. As the saying goes, less convincing required = less marketing expenditure. A study conducted by Boston Consulting Group states that the cost of marketing to existing customers is about $7 whereas the marketing cost per new customer averages at around $34.
It’s simple, a happy loyal customer will share their experience with others building awareness that drives sales, increases revenue, and influences the way a brand is perceived. Basically, consumers who are highly engaged can directly influence purchases, now with the social media as a powerful engine, customers are openly sharing real time feedback on the products & services. A positive feedback acts as a trigger for new customers to purchase. Clearly a repeat customer, can act as a strong brand advocate.
The choice is yours, spend additional dollars on getting new customers or focus on the loyal customers you have. Zinrelo is helping SMB and Enterprise customers create robust, highly customizable, robust and cost-effective loyalty rewards program. Know more
Ever wondered if you can quantify the value of a repeat customer, specifically for your business? Can you apply a simple mathematical model to quantify the value of a repeat customer for your business?
Yes, you can with a simple formula. Click here to get started.