There’s an interesting statistic claiming that about 40 percent of the profit of an average business in the retail industry comes from only 8 percent of return customers. Not only that but it takes substantially less effort to persuade a person to come back for the second time, which means that you get a much better ROI for the marketing revolving around it. Each subsequent purchase gives you an even greater return which is why more and more Australian entrepreneurs care so deeply about this.
Most importantly, if a person spends enough time with you, they might start promoting your business on their own, which, given that they do this for free, stands to make you a fortune in potential returns. With this in mind and without further ado, here are several hacks for an effective customer retention strategy.
First impression matters
Even though we’re here to talk about return customers and return purchases, it’s important to understand that in order for a second purchase to occur, the first purchase needs to be covered by an outstanding service. Think about it, if the website lags, shows some delay, has a complex checkout process or shows overall inefficiency, chances are that there won’t be a next time. Make no mistake, the best way to generate return customers is to present them with something of value the first time around. This is why your service needs to be impeccable.
Another thing worth noting is the fact that every relationship is based on trust and honesty is the main factor in creating a trust-based relationship. You see, one of the main reasons for shopping cart abandonment is the fact that there are hidden costs. Some people in e-commerce deliberately display the price without the delivery and the tax in order to make it appear lower. While it is true that they might generate more first-time sales this way, you need to understand that once your audience figures out what this is all about, they aren’t very likely to come back. In other words, you need to be honest with your audience even when this might not seem like the smartest thing to do.
Investing in customer service
In the first section, we’ve examined why it’s important for your service to be as close to perfect as possible. On the other hand, things don’t always go your way and there might come a time when your customers get in desperate need for a reliable customer service. This is of the utmost importance, seeing as how people employed in your customer service and practices that you use will be both the face and the voice of your business. If you’re uncertain in your ability to make an efficient customer service team in-house, you shouldn’t be afraid to outsource.
Developing a branding strategy
One thing that people value above everything else is brand consistency. The thing about it is that, even if two products have the exact same features yet belong to two recognizable brands, people will be strongly opinionated in favor of one over the other. This is why it’s not enough for you to just work on a brand. You need to have a full-fledged branding strategy in order for this to work.
This is best done by professionals who are familiar with the local market, which means that you would most likely have to narrow down your field of interest. For instance, instead of focusing on the entirety of Australia, you should most likely focus only on Victoria. In that particular scenario, you would look for a branding agency in Melbourne, instead of looking for one in Sydney or Brisbane.
Focusing on relevant metrics
At the very end, in order to ensure that your efforts are going according to plan, you need to keep focusing on the data. Still, with so many different metrics out there, which ones are the most relevant? Well, the first thing (obviously) is the customer retention rate. Apart from this, you also need to look at the customer churn rate, which is its complete opposite (the number of regulars who stopped buying from you). Lastly, there are also repeat purchase probability and customer lifestyle value, which are equally as relevant, despite being slightly more abstract.
Retaining your customer base is an arduous effort, which is why you need to dedicate a bulk of your resources towards this goal. Sure, this is going to be difficult, expensive and time-consuming, however, you need to understand that you always stand to make gains in the end. With this kind of motivation and an end goal to work towards, it shouldn’t be that hard to keep it up even when things seem to be moving fairly slowly.
Dan Radak is a marketing professional with eleven years of experience. He is currently working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies. He is also a coauthor on several technology websites and regular contributor to Technivorz.