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MANILA, Philippines – Attention, business owners: never underestimate the purchasing power of a returning customer.
Repeat purchase customers are the foundation of a profitable business. According to Adobe’s Digital Index Report, 40% of an average business’ revenue comes from repeat clients, even though they make up only 8% of the customer base.
According to a study conducted by Sumall, there’s usually a 27% chance that first-time customers will check out a business again. But a customer who has made at least 3 purchases is 54% more likely to keep coming back.
A repeat customer is also likely to spend up to 5x more than a first-time buyer.
Want more repeat customers for your business? Here are some do’s and don’ts to keep in mind:
Do: Give a good first impression
You can’t have a repeat customer with just a regular ol’ first time experience! While you should spend a lot of your energy appeasing all your current customers, you mustn’t ignore making a good first impression on new ones. There’s a direct relationship between a customer’s first purchase and the probability of his next. In a business, those who spent most on first time purchases are twice more likely to return than those who spent the least.
Don’t: Keep offering discounts
After a customer has made his first purchase, you may immediately assume that offering him discounts will encourage him to come back. Well, it will, but there’s a catch: it sets up expectations. Customers who receive discounts will keep expecting more and will only buy from your store when a discount exists. So instead of enticing them by slashing the price, use retention tools like loyalty programs instead.
Do: Offer loyalty programs
This applies to big and small businesses alike. Loyalty programs are not as costly as they used to be, especially with new services available to entrepreneurs that also allow them to digitize their rewards programs. Plus, rewards programs really do work. Once a shopper has made his first purchase, he is given an incentive to come back. And unlike discounts, he isn’t conditioned to shop only when there are promotions, for as long as he can keep earning points. This also helps with beating the competition.
These are types of loyalty programs that have been proven to work:
- Point Systems
- Tier Systems
- VIP benefits
- Structured non-monetary programs
- Partnerships
- Gamification
Don’t: Misunderstand your customers
One of the biggest mistakes any business can make is to misunderstand customers. Consumer behavior is one of the driving forces of a successful businesses. In relation to loyalty programs, knowing what customers is crucial in deciding what incentive to offer. This is why it would be beneficial to avail of a digitized rewards system, because it opens doors to a world of data and allows businesses to track consumer behavior.
Was this helpful? Try these tips on your business and see if it keeps customers coming. — Rappler.com
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