Every customer patronizing your business is a good customer. But did you know that repeat customers bring significantly more value to your business than new ones? It’s true. Here’s just a small sample of over two dozen data points collected by customer loyalty experts, FiveStars, to help illuminate the power of returning customers. (Visit this FiveStars blog to see all the citations from reputable companies like Nielsen and Oracle.)
- Sixty-one percent of SMBs report that more than half of their revenue comes from repeat customers
- On average, loyal customers are worth up to 10 times as much as their first purchase
- A five percent increase in customer retention can increase a company’s profitability by 75 percent
- Reducing your customer defection rate five percent can increase your profitability 25-125 percent
- The average repeat customer spends 67 percent more in 31-36 months with a business than 0-6 months
- A two percent increase in retention has the same effect as decreasing costs by 10 percent
- Customers are 77 percent more likely to buy a new product when learning about it from family and friends
The statistics rally around a few key points of consumer behavior. Namely that repeat customers spend more over a longer period of time and are a crucial part of getting the high-value word of mouth recommendations that create new customers. And it’s cheaper and easier to keep loyal customers around than to attract new customers.
This is not to say that business owners shouldn’t spend time and money marketing their business to potential customers. They should. After all, a returning customer starts out as a new one. But it’s important for businesses to be tuned into the types of experiences that keep customers coming back. Having the right product helps, but it isn’t the key. It’s not the prices either, though pricing strategy has its place in the conversation.
So what is it that keeps customers coming back? It largely comes down to how your business makes customers feel. From their interactions with your employees, to the cleanliness of your store, and the things they hear about you in the news—customers want to feel positive about the businesses they support, in addition to their purchases.
Ensuring that your customers have a good in-store experience is just as important as making sure they have a good experience on your website, when making returns, and in every aspect of their interactions with your business. And just as a good experience can result in new loyal customers via the good word of mouth they spread, the opposite is true as well. One customer’s negative experience can spread to others like a disease and do real damage to your business reputation.
You should put as much effort into guarding and monitoring your reputation as you do to physically securing your store or minding the cash register. A loss in terms of business reputation is harder to immediately quantify than a loss of cash or goods, but it can be far more damaging in the long run.
How can a business protect its reputation? That’s a question you should think about as often as possible. And you’ll want to ensure you’re employees are thinking about it as well. Here are some of the potentially overlooked ways that businesses can lose ground on their reputation in their customers’ eyes.
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Vantiv cares as deeply about your business reputation as you do. We have several proven loyalty-generating products and services that can help you stay in your customers’ good graces including social media monitoring and engagement services, and loyalty StoreCard solutions. Contact us to learn more about how we can help you keep your customers coming back—and keep them singing your business’ praises to their friends.