Did you know that it costs up to 5x more to acquire a new customer than to retain an existing one? According to research by Bain & Company, increasing customer retention rates by just 5% can increase profits by up to 95%.
These statistics highlight the importance of developing a strong strategy for building customer loyalty and encouraging repeat business. In today’s highly competitive business environment, retaining customers is more important than ever, as it can be the key to long-term profitability and success.
So, what are some effective strategies for building customer loyalty and encouraging repeat business? In this blog, we’ll explore some of the most popular and effective tactics, including loyalty programs, personalized communications, exceptional customer service, and promotional offers.
Whether you’re a small business owner or a marketing professional, developing a repeat customer strategy should be a top priority. By focusing on building strong relationships with your customers and providing exceptional value and service, you can help ensure the long-term success and profitability of your business.
Understanding the Importance of Repeat Customers
Developing a repeat customer strategy is one of the most important keys to keeping a business profitable. But why is this the case? Here are a few key reasons why repeat customers are so critical to the success of any business:
Increased Sales: According to research by Adobe, repeat customers generate 40% of a company’s revenue on average, despite making up just 8% of total website visitors. And if you’re not convinced, here are more market research data on repeat customers from Hubspot.
Lower Marketing Costs: It’s much more expensive to acquire a new customer than to retain an existing one. To acquire a new customer, you’re spending an average of $90.80 just on Google Advertising, according to this benchmarking study by Wordtream in 2022. Having a steady stream of loyal repeat customers offsets the budget it took to acquire them.
Of course, there are cheaper ways to get new customers, like what one of our clients who used hyper-targeted direct mail marketing to advertise for their company (read the case history here), but for bigger companies, spending advertising dollars is a go-to option.
Stronger Brand Advocacy: Repeat customers are more likely to recommend your business to others, which can help to generate new customers and increase overall brand awareness. According to a survey by Nielsen, 92% of consumers trust recommendations from friends and family over other forms of advertising. The brand Rare Beauty and its TikTok user-generated strategy is a great case study on how authentic product reviews can cause a ripple effect on a brand’s sales.
Given these benefits, it’s clear that developing a repeat customer strategy should be a top priority for any business. But what are some effective tactics for building customer loyalty and encouraging repeat business? Let’s explore some of the most popular and effective strategies in detail.
1. Building Loyalty with Personalization & Meaningful Experiences
This can include everything from the design of the store or website to the packaging of products. A study by Salesforce found that 76% of consumers say that the experience a company provides is just as important as the products or services they offer.
A great case study from another client of ours, YYC Siding and Roofing, integrated one-on-one personalized consultations with a simple first-interaction experience for clients reeling from hail storms that caused huge damage to their homes. In his mobile design studio are custom bottled water for visiting customers that immediately highlights what the company is about with easy-to-scan QR codes for getting in touch. The small gesture of offering water to people who are dealing with stress is an experience that creates an immediate connection between them and your business.
Not only is the company personalizing a service based on the customer’s needs, preferences, and budgets via a free consultation, but they’re also making sure that its initial exchange with the customers is founded on genuine human interaction.
We have another case study featuring the Chicago-based staffing agency, Addison Group. To make a strong first impression and craft a memorable experience, they creatively used facial sheet masks to support their tagline “Relax. Let us help.”
It’s such a witty (and thoughtful) way to make sure clients who leave your office will remember you when they get home. These types of promotional gifts are not only cost-effective, but they’re also unique in such a way that customers will associate a positive experience with your business. Skincare and staffing don’t usually mix but that makes the entire campaign stand out all the more.
Other personalization strategies can be taken from Amazon’s product recommendation strategy which used customer segmentation best practices for upselling and cross-selling products.
2. Providing Exceptional Customer Service
We at Brand Spirit can attest to the crucial role of good customer service in keeping repeat customers. About 70% of our clients have been with us for five or more years and we’ve become a reliable service for their custom gifting and branded promotional products needs.
For example, when we were asked to create a 100% custom water globe for a manufacturing company, we knew that the project will need extra time, extra attention, and extra attention to detail to pull off a fully personalized product. This project took months to complete but it was all worth it, having gained a loyal customer that now trusted us for all their other custom gifting needs.
The most important strategy for building customer loyalty is to provide exceptional customer service at every touchpoint. This includes not only resolving customer issues promptly and effectively but also going above and beyond to exceed customer expectations and create a positive emotional connection with your brand.
A more well-known company with excellent customer service is Zappos who’s known for free shipping and returns, 24/7 customer support, and a willingness to help customers with even the most unusual requests. These exceptional service experiences have helped to build a loyal customer base and generate positive word-of-mouth.
To provide exceptional customer service in your own business, start by investing in training and support for your customer service team. Then, look for opportunities to exceed customer expectations and create positive emotional connections at every touchpoint, from the initial purchase to post-sale support.
3. Encouraging Repeat Business with Loyalty Programs
Another effective strategy for building customer loyalty and encouraging repeat business is to implement a loyalty program. These programs offer customers rewards or discounts for repeat purchases or other actions that promote brand loyalty. Rewards could be physical products or electronically redeemable goods for companies with a wider audience.
Physical items that make fantastic rewards for loyal customers are:
- Branded apparel like freebie shirts and caps
- Promotional Drinkware like sustainable water bottles
- Custom Journals with personalized branded pages to make them unique
- Phone accessories or small tech accessories
- Pouches, tote bags, or everyday backpacks
You can also look at Sephora’s Beauty Insider program rewards customers with points for each purchase, which can be redeemed for free products and other perks. American Airlines’ AAdvantage program rewards frequent flyers with miles that can be redeemed for free flights and other benefits.
To implement a loyalty program in your own business, start by defining the types of actions that will be rewarded, such as purchases, referrals, or social media engagement. Then, design a program that offers meaningful rewards and communicates the benefits clearly to customers.
You can order and brand all the items on the left image at brandspirit.com. you even get lower pricing for large order quantities.
In conclusion, developing a repeat customer strategy is essential for the long-term success and profitability of a business. By implementing the right tactics, your businesses can build strong relationships with customers and keep them coming back time and time again.
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