- Return customers are less costly than acquiring new customers, and their loyalty can result in dividends like free word-of-mouth marketing
- Creating a convenient customer experience will help create return customers and turn them into loyal customers
- Ask for customer feedback, then use it to keep improving their experience—and your customer retention
Many small businesses focus their marketing efforts on customer acquisition, and while new customers are vital to any business, attracting them is more expensive than maintaining return customers. Plus, research shows 36.5% of loyal customers spend more—even if they could get a similar product at a lower price elsewhere.
When you generate repeat business from your existing customers, it requires less effort and still boosts your bottom line. Learn more about the value of return customers versus new customers, plus discover ways to attract return buyers and encourage their long-term loyalty.
The value of returning customers vs. new customers
When first-time customers buy from you again, they become return customers. They may even become loyal repeat customers who can’t wait to buy your new products as you release them.
That first purchase from a new customer is a critical touchpoint for any business owner. A first-time buyer may increase your customer base, but they probably don’t feel loyal to you (yet). However, if you offer them a great experience, you’ll increase the chances they’ll come back.
Loyal customers bring many benefits to your business because they already trust you. Consider these facts and figures:
- They save you money on marketing. It costs 6–7 times more to attract a new customer than to keep an existing one.
- They’re open to suggestions. Return customers may plan to buy a specific product, but if you suggest an upgrade or add-on that might be a better choice, there’s a good chance they’ll act on it. This is known as upselling. They’re also more open to cross-selling, which is when you recommend buying other related products.
- They sell for you. When return customers love the experience they’ve had with your business, they’re more likely to tell their friends about it. This word-of-mouth marketing can help bring in new customers and increase your loyal customer base without spending extra on marketing campaigns.
6 ways to encourage return customers and boost your bottom line
Retaining your existing customers should be a top priority in your overall marketing strategy. Try these six customer retention strategies to maximize the chances of repeat purchases from your new customers and existing client base.
1. Keep customers engaged with your business
To create return customers, stay in touch and continue adding value to their lives. Aim to build customer relationships by making them feel part of your community. Try these strategies:
- Gather emails. Don’t let customers walk out the door or leave your website or online store without asking them to sign up for your email list. Add a pop-up to your website, or if you’re selling from a physical store, ask them for their contact details. Sweeten the deal with a small incentive, like a discount on their next purchase.
- Plug your social media. Include the details of your social media profiles on your website and sales receipts to encourage more followers.
- Set up an email marketing schedule and consider starting a newsletter so you’re frequently popping into your customers’ inboxes.
- Promote, promote, promote. Put your latest products, any special offers, and what’s happening in your business or industry in your emails and social posts. Share tips and tricks on how to choose, use, or care for your products.
- Run a competition or giveaway to generate excitement, and encourage them to share with their networks by offering a small incentive.
- Prompt customers to repost your social media posts and forward your marketing emails to anyone who might be interested.
2. Reward return customers with a customer loyalty program
Underpin your customer retention strategy with a customer loyalty program. It shows your appreciation for their business and gives them an incentive to buy from you again.
Customers love saving money, so offer them rewards for the behaviors you want to promote:
- Buying new products. Create excitement for return customers by giving them early access to new products. Or offer them discounts on the new product, free samples, or free shipping when they buy it.
- Making high-dollar purchases. For example, if first-time customers join your loyalty program and spend over $100 on their next purchase, they get a free gift or 10% off.
- Shopping regularly. For example, if you run a deli, you could give customers a free sandwich after every tenth purchase. Or a clothing boutique owner could offer a free scarf or reusable tote after the fifth store purchase of $50 or more.
- Buying multiple products at once. For example, if they buy three products, they get the fourth half off.
You could also include a referral program in your customer loyalty program. Word-of-mouth marketing from current customers is so powerful that when a new customer is referred by a friend, they convert five times faster than other first-time shoppers.
If your business is small, you may be able to manage your customer data and loyalty and referral programs with a simple Excel spreadsheet or Google Sheets. As your business begins to grow, you may need a customer relationship management (CRM) system—Zoho, Monday.com, and Freshsales offer free trials and options.
3. Encourage and pay attention to customer feedback
Customer feedback gives you valuable information about how well your products or services are working—or not working. When you ask your customers for input and then use it, you demonstrate that you care about customer satisfaction.
Try these methods to solicit customer feedback:
- Send a follow-up email a couple of weeks after a purchase to check if they’re happy. Ask customers to rate their level of satisfaction and to share any feedback.
- Survey your customers to find out how your company is doing. Include an optional notes field asking for suggestions on how to improve your products, processes, or customer service. You can incentivize them to fill out the survey by offering a discount or freebie on their next purchase.
- Add or claim your free Yelp Business Page so customers can easily find your company details and leave a review after their purchase. Be sure to respond to all reviews, whether they’re positive or critical, as this signals your level of customer service to current and potential clients.
Get a free Yelp Page
Promote your business to local customers.Claim your free page
4. Go above and beyond with customer support
Subpar customer service can drive people away from a business, but excellent customer service will drive sales. You can show you care deeply about your customers with a few simple strategies:
- Provide contact details for customer support on your website and respond as quickly as possible to any queries you receive, ideally within one hour—or within one day, at the most.
- Acknowledge receiving their query, even if you don’t have an immediate answer for a customer’s question, and let them know when you’ll get back to them.
- Provide FAQs on your website and printed in your store. Frequently asked questions might include information about shipping costs, your return policy, or what products are made of.
- Proactively contact the customer before they contact you if you become aware of a problem.
- Be empathetic and try to see things from the customer’s perspective.
- Make amends for any issues in whatever way you can. For example, you may offer a disgruntled customer a free gift or a discount on their next purchase.
- Train your employees to be courteous, knowledgeable about products and company policies, and current with the latest information.
5. Create a memorable and convenient customer experience
Even though a lower price may not sway your loyal customers to shop elsewhere, research shows that 75% of customers would be prepared to switch to a competing company if it offered a more convenient shopping experience. As such, aim to make every customer experience as seamless and stress-free as possible. Here are some tips, whether you sell products or services in person, online, or both.
If you have a brick-and-mortar location, try these in-person enhancements:
- Display engaging retail signage so people can easily find and learn more about your shop—from promotional sales to specific sections of your business.
- Keep it inviting by making sure your business is always clean, neat, a comfortable temperature, and has adequate lighting to showcase your products.
- Display your products in an organized way so people can find what they need. For example, you could group them by product type, brand name (if you sell multiple brands), or price range.
- Use shelf labels, sales tags, stickers, or other signage to display pricing and other helpful product information where people can easily find it.
- Make checkout a snap by accepting multiple forms of payment in a clearly designated area that contains your branded shopping bags, gift wrap, and other information like your business cards or brochures.
All business types can apply these online tips that translate to an overall smooth customer experience:
- Implement search engine optimization (SEO) tactics so your website shows up on search engine results pages (SERPs). Use free keyword research tools to identify key search terms your target audience is using, then implement those terms throughout your web content.
- Build a professional and credible website. You can set up a basic website yourself but if you need help, sites like Fiverr, 99Designs, and Upwork showcase affordable professionals for hire.
- Provide a search function. Help customers easily find the products or services they’re looking for on your website with a search tool. Also, group your products and services by category for better organization.
- Include high-quality images and detailed product or service descriptions so they can see exactly what to expect.
- Offer a few payment options to cater to different people. For example, you may allow payments by credit card, debit card, Apple Pay, or services that provide payment plan options.
If you have an e-commerce site, be sure the check-out process is carefree. Adding items to a shopping cart and checking out should be intuitive and easy, even for shoppers who aren’t tech savvy. The shopping cart should be accessible from each page of your website—the navigation pane is a good place to add a shopping cart widget.
6. Check if your retention strategy is working
To see if your strategy is actually working, check your customer retention metrics at regular intervals. These return customer metrics are particularly useful:
- Customer retention rate: the percentage of customers who stay with your company over a period of time
- Churn rate: how many customers have stopped doing business with you
- Repeat purchase rate: how many customers buy from you again
- Customer lifetime value: total revenue per individual customer
Ideal results for these metrics vary widely depending on what you’re selling, so check them against others in your industry.
Grow your business with return customers
Return customers can be worth more to your business than new customers. They can save you money on marketing, boost your profits, and promote your brand to their friends and family.
To encourage first-time customers to come back and buy from you again, focus on creating an exceptional customer experience from start to finish. Make shopping easy for them by finetuning your website so it’s user-friendly and works seamlessly. Provide excellent customer support, and stay in touch via email and social media so you’re always top of mind.
Once they’ve bought from you, loyalty programs incentivize customers to come back, while referral programs encourage them to invite their friends to shop with you too. Regularly ask for feedback to find out how you can improve, and finally, keep an eye on your metrics to make sure your customer retention strategies are working.
Next, take a deep dive into these effective customer retention strategies. The effort you invest in creating happy customers will pay dividends over and over again.
The information above is provided for educational and informational purposes only. It is not intended to be a substitute for professional advice and may not be suitable for your circumstances. Unless stated otherwise, references to third-party links, services, or products do not constitute endorsement by Yelp.