Encourage Repeat Customers with These Genius Tips

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encourage repeat customers
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Research suggests that repeat customers are 5X more profitable than replacing a customer [Forbes]. In fact, increasing the retention rate by only 5% results in profits increasing by up to 95%. When a customer repeatedly makes purchases, they help you grow your company. According to Adobe, a repeat customer spends up to 67% more Combine returning customers with new ones to boost your sales and expand your business. You must encourage repeat customers if you wish to grow your business quickly and effectively.

After operating my own startup marketing agency, I discovered that retaining and nurturing existing clients had much better ROI than on-boarding new ones because you already have existing manpower dedicating time on these operations, and don’t need to initiate a new process. Then, if clients are already paying you monthly, they are accustomed to it and you can offer more services because of the trust you’ve built. Getting the first dollar from a new client is much more time consuming — Yoav Vilner, CMO

Yet the vast majority of firms (80%) spend less than 30% of their marketing budget and time on cultivating repeat purchases from customers. Thus, you must pay attention to your existing customers and understand what keeps them coming back to buy from you to grow your business and revenues.

What keeps customers coming back?

That’s a question you must answer if you want to optimize revenue from repeat customers. However, these tactics seem ubiquitous across most industries, so they’re a good starting point to encourage repeat customers:

  1. fast shipping
  2. easy returns
  3. quick and thorough customer service
  4. expertise
  5. personalization of communications

Of course, your experiences might differ, with additional factors contributing to customer retention based on the unique attributes of your market, so a little research is required to determine how best to encourage repeat customers.

Customer lifetime value

A caveat is appropriate here. Not all customers are worth keeping and we talk about culling out customers who represent too little return for the expenses incurred in keeping the customer. This is based on calculating the customer’s lifetime value, a calculation based on cumulative purchases over time, cumulative costs over time, and the expected length of time the customer continues purchasing from the business.

Thus, we must sometimes fire customers by discouraging them from making repeat purchases. For example, a customer who frequently returns items, especially when reselling those items is difficult, may reflect little profit or even a slight loss for your business. Fire ’em!

Of course, you never stand at the door screening customers before they walk in, keeping fired customers from entering your business (whether physical or virtual). Instead, you craft policies to discourage low-profitability customers from continuing. Banks do this all the time with their tiered service options that reward high-value customers with large balances by giving them extra benefits and discouraging small balance customers by charging per check fees after processing a small number of checks per month or assessing charges for other benefits that come free to high-value customers.

Tactics to encourage repeat customers

It seems obvious, but it’s worth mentioning that the key to encouraging repeat customers is to provide superior customer service. Also, ensuring customers realize how much you value their business goes a long way toward building repeat purchases. For instance, sending a thank you note after a major purchase or an email thanking customers for their purchase makes customers feel valued.

In addition to this, what tactics can you employ to encourage repeat customers? Effectively, most ideas revolve around incentives and loyalty. Here are some of the best ideas to help you grow revenue from your customer base:

Gift cards

Providing gift cards to customers is smart for a couple of reasons. Firstly, it gives them an added incentive to return and buy something else since they’re basically getting money off their purchase, or they could even get something for free if you can afford to make that offer. Secondly, gift cards ensure customers shift more purchases to your business since they now have an incentive.

Companies used this tactic for years, and it’s highly successful. You see businesses offering all kinds of gift cards – from a standard one to special Thanksgiving gift cards and everything in-between. For instance, on Black Friday many businesses offer a gift card in exchange for making certain purchases to encourage new customers to choose their business for holiday purchases as well as encouraging repeat customers since they must return to get the value of the card.

Loyalty programs

Create a loyalty program in your business that rewards people for making repeat purchases. A basic example of this is a points system where every dollar spent is worth a point. For example, one dollar is worth a point, and every point is worth fifty cents. If someone buys something for $50, they earn 50 points, meaning they can cash the points in for $25 in a new product. They can use this money to go towards a future purchase. More commonly, customers retain points on a punch card and once they accumulate all the punches, they get a free product.

Loyalty programs work really well as the more purchases someone makes, the more money they save for future purchases. Lots of people hoard points for a whole year before using them on Black Friday sales. It’s a proven tactic that works really well, you just have to design a good enough loyalty program.

However, you need more than just starting a loyalty program to succeed in efforts to encourage repeat customers. For instance, the average US household is signed up for between 19 and 28 loyalty programs but only actively uses 12 of them, according to NASDAQ. NASDAQ also shows declines in the use of loyalty points on these programs by 2-3% a year since 2010, resulting in over $50 billion in unclaimed rewards.

Thus, you must actively promote your loyalty program to ensure the program actually drives repeat purchases rather than just languishing in wherever loyalty points go to die.

encourage repeat customers


Exclusive deals

Lastly, you should consider offering exclusive deals to people who already made purchases from your business. In a way, this rewards their loyalty. An excellent example of this is offering a special 15% discount for returning customers. The key to this is ensuring that people register their email when they make a purchase. This way, they become a ‘member,’ and you grow your subscriber list and send future marketing emails whenever you please.

Try one or all three of these ideas and use them as part of your marketing strategy to gain repeat customers. As mentioned before, you need repeat business to grow your company.

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