5 ways to Increase Repeat Customers

Let's explore 5 strategics to boost repeat customers for e-commerce brands. By enhancing customer relationships and experiences, it presents valuable insights that can aid in company growth and brand value elevation.

Nov 29, 2023

Contents

1. Repeat Customers: A Definition How Do You Calculate Repeat Customers?Why Are Repeat Customers Important?2. How to Identify Repeat Customers 3. Five Ways to Create Repeat Customers A. Create Customer Loyalty Programs B. Offer discounts and incentives to repeat customers C. Practice excellent customer service D. Collect feedback and update your products E. Use CRM tools to stay top of mind 4. Why Repeat Customers Are Necessary In Your Business

In the digital age's economic landscape, customer loyalty plays a pivotal role in the growth and success of ecommerce brands. This piece presents five methods to increase repeat customers. By deepening customer relationships, enhancing customer experiences, and maintaining long-term relations, businesses can secure sustained support from their customers. These strategies not only elevate the brand's value but also induce customer repurchases, thereby aiding the company's growth. Therefore, this article contains must-read content for anyone operating an e-commerce brand

1. Repeat Customers: A Definition

Repeat customers are individuals who make multiple purchases over time from the same company or brand. They are distinct from one-time buyers, also known as a new customer, as their repeated transactions indicate a level of satisfaction and loyalty towards the product or service.

How Do You Calculate Repeat Customers?

To calculate repeat customers, businesses typically analyze their sales data to identify individuals who have made more than one order during the entire operating period or within a given timeframe. Metrics like the Repeat Purchase Rate (RPR) can be insightful, which is the ratio of the number of customers who have shopped more than once to the total number of customers.

Why Are Repeat Customers Important?

Repeat customers are essential for business success, as they tend to spend more over time, thereby reducing customer acquisition costs. While brands may incur some expenses in retargeting existing customers through performance marketing or CRM campaigns, this approach can be up to 25 times more efficient than acquiring new customers. This increased efficiency is due to a significantly shorter funnel leading to checkout, as noted by the Harvard Business Review. Additionally, repeat customers are more likely to become brand advocates, promoting the business through word-of-mouth.

2. How to Identify Repeat Customers

The most powerful function of Retentics is its ability to identify customers who are at the right timing for another purchase. Our team has been fervently working on this AI algorithm since the inception of our business. The proficient detection of optimal timing has proven to be a game-changer in reducing customer fatigue in CRM campaigns, significantly enhancing engagement metrics, including open rate, click-through rate, and conversion rate.

Finding repeat customers is key to keeping a business growing, and it takes a smart approach. Our team uses something called hyper-segmentation to figure out the best next purchase for each customer, considering the larger pattern of their segment's behavior. For example, some customers may only buy an iPhone, while others might follow it up with an Apple Watch purchase in a few months. Then there are those who might wait a couple of years before adding an Apple Watch to their collection. Our Retentics AI leverages this hyper-segmentation algorithm to adeptly detect all these kinds of preferences, thereby identifying potential repeat customers amidst a sea of diverse buying histories. This strategy is super important not just for customers who buy often but also for those who've only bought once. Thanks to hyper-personalization, Retentics AI is great at getting these new customers interested, by giving them personalized suggestions and messages that they're likely to enjoy. This method helps turn people who've bought once into customers who come back again and again.

Our recent collaboration with Professor Ahn from the University of Michigan has taken our capabilities a step further. This partnership has culminated in the development of a more advanced and precise prediction algorithm. These innovations are central to our commitment to continually evolve in the dynamic field of customer relationship management, ensuring that our clients can foster deeper, more profitable relationships with their customers.

3. Five Ways to Create Repeat Customers

A. Create Customer Loyalty Programs

Developing customer loyalty programs involves identifying and nurturing loyal customers using the Lifetime Value (LTV) metric. This helps in budgeting for engaging new customers to adopt loyal purchasing behaviors. Offering exclusive benefits to loyal customers, based on LTV calculations, can differentiate their experience. It's important to assess how these benefits impact the spending behaviors of customers who receive them compared to those who don't.

In these programs, personalization is key. Utilize customer data to tailor experiences and rewards, offer exclusive member benefits, maintain regular communication to keep the brand top of mind, and create feedback loops to continually improve the program.

Personalization and Engagement in Loyalty Programs

Data-Driven Insights: Utilize customer data to create personalized experiences. This can range from personalized email communication to offering rewards that align with individual customer preferences.

Exclusive Member Benefits: Provide loyal customers with exclusive offers, early access to products, or special member-only events. This not only rewards their loyalty but also enhances their connection with the brand.

Regular Communication: Keep in touch with your loyalty program members through regular updates about new rewards, points balances, and exclusive offers. This helps keep your brand top of mind.

Feedback Loops: Encourage feedback within the loyalty program. This not only helps in improving the program but also makes customers feel valued and listened to.

B. Offer discounts and incentives to repeat customers

Offering discounts and incentives is an effective strategy to encourage repeat purchases. However, this approach requires careful execution. Firstly, the messaging needs to be attractive and personalized to avoid being perceived as spam. Personalized discounts can significantly enhance customer engagement. Secondly, offering too many discounts can potentially devalue your brand. Customers remember their spending history, and a significant discrepancy in prices can lead to hesitation in future purchases. This issue can be mitigated through AI-powered personalization. Using AI to predict the timing of repeat purchases can be helpful. For instance, if customers don't return within the expected timeframe, offering a coupon can be a good strategy to entice them back.

Strategic Discounting and Incentivization

Targeted Discounts: Use customer purchase history and behavior to offer discounts that are relevant and timely. This increases the likelihood of the offer being well-received.

Limited-Time Offers: Create a sense of urgency with limited-time offers. This can encourage customers to make a purchase sooner rather than later.

Exclusivity: Offer exclusive discounts to members of your loyalty program. This not only rewards them but also incentivizes others to join the program.

Seasonal and Occasional Offers: Align your discount strategies with seasons, holidays, or customer milestones (like anniversaries of joining the loyalty program) to make them more relevant and appealing.

C. Practice excellent customer service

Exceptional customer service is a cornerstone of building customer loyalty. It's important to ensure that your customer service is not only responsive but also genuinely helpful and friendly. This applies to both online and offline interactions. Remember that while all customers are important, in many DTC (Direct-to-Consumer) brands, 10-20% of loyal customers can account for up to 50% of total revenue. Therefore, focusing on exceptional customer service, especially for loyal customers, is crucial. While chatbots can be efficient, they often fail to fully satisfy customer needs. Personal interaction, empathetic listening, and prompt problem-solving are key elements of effective customer service.

Incorporating Customer Feedback

Regular Surveys and Feedback Forms: Implement regular surveys or feedback forms post-purchase or at other customer journey touchpoints.

Active Listening on Social Media: Monitor social media for customer comments and feedback about your products. Engaging with customers on these platforms can provide valuable insights.

Product Improvement Teams: Have dedicated teams or processes in place to analyze feedback and implement changes in your products or services.

Transparent Communication: Communicate back to the customers about the changes made based on their feedback. This transparency can build trust and loyalty.

D. Collect feedback and update your products

Customer feedback is an invaluable resource for product improvement and customer satisfaction enhancement. It's often said that customers will not return if they're dissatisfied with a product, regardless of the quality of the website experience or customer service. Therefore, it's essential to continuously gather customer feedback and identify areas for improvement. This can be done through surveys, feedback forms, or direct customer interactions. Analyzing this feedback and implementing changes based on it shows customers that their opinions are valued and taken seriously, which can lead to increased loyalty and repeat purchases.

Enhancing Customer Service

Training and Development: Regularly train your customer service team on product knowledge, communication skills, and problem-solving techniques.

Personalized Interactions: Encourage personalized interactions, where customer service representatives have access to customer history and preferences.

Feedback Mechanisms: Have mechanisms in place for customers to provide feedback on their service experience, and use this feedback to make continuous improvements.

Multi-Channel Support: Offer customer support across various channels like phone, email, chat, and social media to make it easy for customers to reach out in their preferred way.

E. Use CRM tools to stay top of mind

Utilizing CRM (Customer Relationship Management) tools effectively is essential for keeping your brand in the minds of your customers. Split your marketing efforts into two distinct strategies: broadcasting and targeted messaging. Broadcasting is about maintaining brand presence and should not be overly sales-focused, as this can lead to customer fatigue and unsubscribing. On the other hand, targeted messaging should be focused on encouraging repeat purchases. This involves identifying the exact needs of the customers and timing your communications accordingly. The success of targeted CRM marketing hinges on hitting the right note at the right moment, with offers that are relevant and appealing to the customer.

Effective Use of CRM Tools

Segmentation: Use CRM tools to segment your customer base for targeted communications. This can be based on purchase history, customer behavior, or demographic data.

Personalized Campaigns: Create personalized email or push notification campaigns. Personalization can increase the effectiveness of your messages.

Analytics and Reporting: Use the analytics and reporting features of your CRM tools to track the success of your campaigns and make data-driven decisions.

Integration with Other Systems: Ensure your CRM is integrated with other business systems like e-commerce platforms, social media, and customer service tools for a holistic view of the customer.

4. Why Repeat Customers Are Necessary In Your Business

In today’s highly competitive market, the significance of repeat customers extends far beyond mere brand loyalty. Various studies and substantial data underscore their critical role in ensuring business sustainability and growth. Here's a closer look at the invaluable contributions of repeat customers, backed by compelling research and statistics.

Enhanced Profitability with Reduced Costs

A groundbreaking study by Bain & Company reveals a direct correlation between customer retention and profitability. The research indicates that a mere 5% increase in customer retention can boost profits by an impressive 25% to 95%. This dramatic surge in profitability can be attributed to repeat customers, who make frequent purchases without necessitating the hefty marketing expenditures required for new customer acquisitions.

Increasing Lifetime Value

Repeat customers are not just regular patrons; they are key contributors to a business's revenue over time. Harvard Business School's findings highlight that repeat customers spend up to 67% more in their third year of patronage compared to their initial six months. This escalating spending pattern underlines the growing lifetime value of these customers, making them a goldmine for businesses.

Brand Advocacy: Beyond Purchases

Loyal customers often transform into brand advocates. Research published in the Journal of Marketing has shown that word-of-mouth endorsements from satisfied repeat customers can significantly amplify a company’s customer base, outperforming traditional advertising methods.

In conclusion, the role of repeat customers in the business ecosystem is paramount. They are the cornerstone of profitability, cost efficiency, brand advocacy, and resilience. Cultivating a loyal customer base is not just a strategy but a necessity for businesses aiming to thrive in the competitive marketplace.

Written by. Zack Lim