Unlocking the value of long-term customers
Every business wants new customers in the door to boost sales and grow the bottom line. But what about those customers that have already come through and made a purchase? Are they the key to unlocking long-term business growth?
Studies by Bain & Company, working with Earl Sasser of the Harvard Business School, show that increasing customer retention rates by 5% increases profits by 25% to 95%.1
To help you take care of your existing customers and get them coming back for more, here are four ideas worth exploring.
Treat your loyals like royals
One way you can increase in-store sales is by introducing a loyalty program that offers rewards, discounts or other incentives to customers who shop in-store. They’re a great way to recognise loyal customers and can be highly effective at encouraging them to keep shopping with you. 83% of people2 say joining a loyalty program will keep them shopping at that business.
There are typically four categories: points, paid programs, social media and tiers. You can offer anything from free shipping to exclusive discounts and early access to new products.
According to research by global consulting firm KPMG, 81% of Millennials3 say that being a member of a loyalty program encourages them to spend more with the company. Given how effective it can be at driving sales, it could be a cost-effective way for you to say “thanks'' to your most valuable shoppers and build long-term trust so you get repeat business.
Tap into your POS system
A good point-of-sale (POS) system is more than just checkout software. It can provide valuable data on your inventory and insights into your customers, which you can use to your advantage.
Knowing what your customers like to purchase can help inform your marketing plan, and tailor customer experiences and build relationships. It can also help you identify repeat customers, which you can target with special offers.
From an inventory perspective, your POS system can help you identify your most popular items so you can feature them in your store. It will give you insights on seasonal trends, which can help you plan your displays and sales.
It can also help you deliver better customer service by knowing exactly what stock you have in-store. And when you consider that 93% of customers4 are likely to make repeat purchases with companies who offer excellent customer service, it pays to prioritise a good customer experience
If you implement a loyalty program, you can use the POS data to segment your customers and provide personalized rewards and offers based on their past shopping behaviour.
Offer digital receipts
A great way to get contact details on your customers is by offering digital receipts. It’s not only convenient for them—it’s so much easier finding an email than a small piece of paper—but it also lets you capture valuable information about their shopping preferences and gives you their email address and/or mobile number, which you can use to market to them later.
Knowing which products and offers appeal to a particular customer means you can create more personalized experiences and target them with relevant information, deals and updates.
There is also an opportunity to cross-sell to them when you email the receipt. Use that real estate to promote other deals or experiences that could trigger a repeat purchase.
And if you have a loyalty program, the data you captured here means you could add them to your program and start building a long-term relationship.
Good returns deliver greater returns
Allowing your instore and online customers to easily return their items to you instore not only creates a great customer experience, but it gives you the opportunity to upsell.
Letting your online customers return items in-store can also significantly cut down processing and handling time for you, and it means you could resell the product at full price.
According to research by Incisiv,5 shoppers expect fast, free and easy returns and 95% of those surveyed said a poor returns experience will make them less likely to shop from a brand again. Conversely, customers who find it easy to do returns with you are more likely to shop from you—making larger and more frequent purchases.
The best way to tackle returns is to keep them hassle-free for your customers, and easy and straightforward for your staff to process. Try to reduce the friction as much as possible to deliver a positive customer experience. Done right, returns can increase the lifetime value of a customer.
Retaining customers should be front and centre of your plan for long-term growth. Customer retention costs 5 – 25 times6 less than customer acquisition, so it pays to have a strategy in place that takes care of your most valuable customers and ensures you embrace customer loyalty as a top priority.
Source:
- The Economics of E-Loyalty, Harvard Business Review, July 2000.
- 70 Powerful Customer Retention Statistics You Need to Know in 2021, Semrush, 16 April 2021.
- The truth about customer loyalty, KPMG.
- 40 Customer Service Stats to Know in 2022, Hubspot, 27 June 2022.
- 2021 State of the Industry Report, Retail Returns, Incisiv, Q2 2021.
- The Value of Keeping the Right Customers, October 2014.
All references to any registered trademarks are the property of their respective owners. Afterpay does not endorse or recommend any one particular supplier and the information provided is for educational purposes only.
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