Anybody who runs their own business will admit that attracting customers to your product/service is hard enough. After fending off each one of your competitors, alternatives to your product or even the customer’s own fickleness to commit to a purchase, an actual sale can leave you feeling like you deserve a sinful, creamy, double chocolate cupcake with a liquid chocolate core. (Mmm!)

If a basket of cupcakes is chocolate nirvana, a customer who returns over and over again and buys at your store would be the embodiment of business nirvana.
Trouble is, such a customer is unbelievably hard to find. We all know the most commonly touted facts about repeat customers:

“Attracting new customers is 5 times more expensive than retaining existing customers.”
~ Lee Resource, Inc.

“80% of your company’s future revenue will come from just 20% of your existing customers.”
~ Gartner Group

Before figuring out how to grow repeat customers, it’s important to understand why we need them in the first place.

Repeat customers have a big impact on your profits.

Read that aloud. According to a study by Harvard Business School, a 5% increase in customer retention can increase a company’s profitability by anywhere from 25 to 95%. That’s huge. And it gets better.

Having repeat customers is similar to cutting costs. A mere two percent jump in customer retention rates is monetarily equivalent to cutting costs by ten percent, state Emmett and Mark Murphy in their book Leading from the Edge of Chaos: The 10 Critical Elements for Success in Volatile Times.

Just as increased retention rates are good for profitability, not focusing enough on customer retention and only chasing after new customers brings your profitability down. The cost of bringing a new customer to the same level of profitability as a repeat customer is up to 16x more than the cost of retaining an existing customer.

Now that you’re clear on how crucial repeat customers are to the sustainable growth of your business, let’s take a look at what can be done to keep your joy going and the customers coming back.

1. Hire a good team

A great company is the result of a talented, committed team that feels a deep sense of ownership and loyalty towards the organization and are brand evangelists in their own right.

I mention this as step 1, because everything else you do will flow from here. Your product will be first rate because an intelligent and sincere team was behind it. Because they feel a sense of ownership with the brand, they will offer great service and try to help the customer at every step. Michael LeBoeuf, professor at the University of New Orleans, and author of How to Win Customers and Keep Them For Life, throws light on the biggest reason why customers stop coming back to you:

“68% customers quit because of an attitude of indifference towards them by the owner, manager or some employee.”
~ Michael LeBoeuf

2. Create a great purchase experience

Instead of saying user experience, say buying experience, because this is as important for online businesses as it is for offline.

Make sure your website is clean, clutter-free, well thought out and well designed, to help the customer navigate through, in a painless manner. Make sure your purchase flow is streamlined, well-engineered and user friendly to prevent customers from dropping out mid-purchase. The ShopIntegrator e-commerce plug in is a great example of a smooth and glitch free purchase experience.

Offer exceptional service. This applies to your online service, in traditional stores, on your customer service number, live chat service, shipping and delivery – every customer touch point, period. A customer may not remember average service they received, but they will definitely remember a terrible service experience and worse, spread the word about it. Two key benefits of exceptional service are higher customer loyalty and lower price sensitivity. 86% of customers will pay more for great service, according to an Oracle Customer Experience Impact Report.

3. Keep in touch regularly

“Out of sight, out of mind” has never been truer than in today’s hyper competitive, super connected world. With the number of different devices, mediums and entities that wish to communicate to your repeat customer, you need to keep pace with your communication if you want to be remembered through all the chaos.

Thankfully, the same technology that creates this “e-chaos” comes to your rescue when it comes to communicating with your valued customers.

Reach out to them through as many platforms as you can realistically manage – Email, SMS, Facebook, Twitter, LinkedIn, SlideShare or any other medium that speaks to your audience. Always remember, your interaction on whichever medium needs to enrich the customer, or else they will not see value in communicating with you and your presence on these platforms will become redundant.

4. Reach out to unhappy customers and learn from them

Just as satisfied customers will gladly turn into brand advocates for you, unhappy customers can ruin your brand reputation and drive away any potential customers you may have had in their social circle.

“A dissatisfied consumer will tell between 9 and 15 people about their experience. About 13% of dissatisfied customers tell more than 20 people.”

~ White House Office of Consumer Affairs, Washington, DC

Prevent this negative word of mouth from spreading, by nipping it at its bud. The very same platforms referred to above, can be leveraged to reach out to an unhappy customer. Listen to what their problems are, apologize for the trouble they went through and offer a realistic solution that will make the customer happy. Most importantly, take your learning from the problems that your customers highlight and apply them to your business. Customer feedback is the most valuable input you can use to design your business and grow sales.

5. Be nice

Retaining repeat customers is not a clinical task of crunching numbers or rolling out one retention marketing campaign after another. It is about building a one on one relationship between the customer and your brand.

With Big Data and all the various ways to harness it, you have a gold mine of personal information about your customers. Show the customer you care by reaching out to them at times that are special to them – birthdays, anniversaries, a hello after a long purchase absence, a thank you for the purchases they did make – take your pick.

6. Seek permission and preferences from your customers

Automatically opting in a customer to your email list is what a lot of ecommerce sites do by default these days. However, opted in customers are far more likely to respond to your communication than customers that you spam with your emails. Seek your customers’ permission to communicate with them.

Ask them upfront the frequency of communication they prefer and the mode of communication that will work best for them (email, social media, direct mail, SMS). This will give you a customer who is genuinely interested and engaged, plus it will also prove to the customer that you respect their wishes and are their friend.

7. Educate them about how to best use your product

Many customers buy a product and then leave it to gather dust in a corner as they are too confused to figure out how to put the product together or how to really use them. A good example of a product that just sat there after being bought was the ubiquitous encyclopedia set in every home a few decades ago.

Don’t let your product fall into this trap. Once the first purchase is complete, communicate to the customer on how to use the product, the various benefits it offers, interesting applications of the product and so on. This will not just drive interest and usage of your product, it will also prime the customer for a future purchase from you.

8. Upsell and cross sell products they might like

Earlier we discussed about the wealth of information we now have access to as marketers and business owners. Instead of just pushing your agenda, play nice.

Apply the insights that you gleaned about the customers shopping preferences based on transactional and behavioral data gathered till date and send them details on products that they might enjoy. This shows the customer that you’re listening and that you care, while simultaneously creating revenue opportunities for you.

9. Use artificial advancement on loyalty programs

Give customers a head start on your loyalty program to see greater customer stickiness and higher dollar values from the conversions.

Joseph Nunes and Xavier Dreze, conducted an experiment on the customers at a local carwash. They gave out loyalty cards to 300 customers but split them into two groups without their knowledge. Group 1 got cards that said they had to complete 8 washes with the carwash service to get 1 totally free carwash service. Group 2 got cards that said they had to complete 10 washes at the carwash service to get 1 free carwash service. This card had a twist in its offer. It said, “We’ll give you 2 free washes just to give you a head start in the game.” So in effect, group 2 also needed to do 8 washes to get the 1 free wash.

The results that came in showed that group 2 outperformed group 1 by almost twice the margin! While 19% of the customers from Group 1 completed the 8 washes, a whopping 34% of customers from Group 2 completed the set of 8 washes, thanks to the psychological nudge they got with the “head start” communication.

10. Use display retargeting to maintain top of mind recall

Retargeting is basically a form of display advertising, where a customer who has visited your site is shown ads related to your brand or the item they browsed, on sites that they visit after they exit your site.

While retargeting is primarily used as a customer acquisition tool, it makes perfect sense to use it as a subtle branding tool for your repeat customers to ensure sustained top of mind recall. It acts as a nudge to accelerate a future purchase or a reminder to repeat customers who are at risk of lapsing.

A study of over 0.25 million online transactions shows that if no efforts are made towards retaining customers, just 5% of all first-time customers will return to your site of their own accord. Of the 5% that does return to your site, only 3% will actually make a second purchase.

KISSmetrics puts the cost of a lost customer at $289 per customer.

Putting these two metrics together, if you get 1000 new customers on your site per week, only 50 will come back to your site for browsing around. Of these only 3% i.e. only 15 customers out of 1000 customers will ever actually make a second purchase. This means you’ve lost 985 first time customers for good. In revenue terms, your weekly loss would be $284,665 or nearly $14.8 million in a year.

It’s your choice – would you rather spend millions of marketing dollars on acquiring new customers who never return or would you dedicate a substantial portion of your marketing efforts to nurture every customer you currently have into a lifelong user and brand advocate?

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