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Customer retention basics

It is both cheaper and easier to sell to an existing customer than to process a completely new one. But what can you do to get repeat customers?

Many business models make it quite natural to sell to existing and past customers. Someone who subscribes to a newspaper or a magazine makes for a good example of this. Online, it’s also quite common for subscription customers to rent storage space in various cloud services.

Repeat customers are desirable for several reasons: there’s usually less cost involved in reaching existing clients, less marketing budget is required, and they may act as ambassadors for the product, service and brand.

It goes without saying that the proportion of repeat customers varies across different sectors. If you have a retention rate of 45% or more, you’re doing something effectively. If your retention rate is 20% or less, it may be time to step up your marketing.

Here are five tricks for creating repeat customers:

1. Reward loyal ambassadors

An ambassador is so much more than a regular customer. They are customers who are happy to tell friends, acquaintances or strangers that he or she is a customer of yours. One way to find ambassadors is to listen to social media. This enables brands to enjoy real-time mentions across social, news and other web media. Tools like Observify use powerful features to give you a quick, easy-to-use dashboard when contacting customers and leads.

2. Treat your customers well

Don’t frequent customers deserve a little reward? It need not be fancy, nor costly, for your business to reward loyal customers. This may involve arranging contests and sweepstakes for loyal customers only. Provide faster or more extensive service to VIP customers, similar to the car rental industry. Bonus schemes are another common way of gaining repeat customers, and are commonly used in the leisure and tourism industries.

3. Give regulars something extra – free of charge

It might actually be enough to loyal customers to receive information before everyone else to make them them feel wanted and appreciated. There is always a balance of how much information you should give out, partly from a competition perspective, but also in order to prevent information being perceived as spam.

4. Use your best clients to improve

Let willing customers become an important part of the development process for your product or service. A customer panel, test group or development group of customers can bring benefits to your business. You’ll also win trust, binding these customers even closer to you and your brand.

5. Let your customers become your salespeople

Is anyone a more credible seller than a satisfied customer? Be sure to reward those customers who create referrals. This could be anything from a simple premium to a discount for future purchases. This type of marketing often embodies the word of mouth concept, and usually produces genuinely positive results.

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