Loyal Customers Are Your Best Advertising
Remarkably, 20 percent of your customer base typically accounts for 80 percent of your revenue with repeat purchases. While loyal customers are the lifeblood of any business, too many business owners spend an inordinate amount of time attracting new customers—when they should be lavishing existing customers with the attention and appreciation they deserve. After all, in addition to being responsible for the majority of your revenue, those loyal customers are your best form of advertising.
Nothing Beats Word of Mouth
If you find yourself in an unfamiliar town in need of a car repair, how will you decide upon a mechanic to take care of the problem? In all probability, you’ll go to a peer review site like Yelp and search for one acclaimed for their experience, professionalism, and honesty. In other words, you’ll rely upon word-of-mouth advertising. You’ll trust it because you heard from someone like you who had a problem similar to yours who had a positive outcome.
A Nielsen survey found 92 percent of shoppers trusted word-of-mouth referrals and recommendations from family and friends over all other sources of product information—including advertisements. The study also found online consumer reviews are the second most trusted form of advertising, with 70 percent of global consumers surveyed indicating they trust them.
This is what your loyal customers are doing for you every day.
Keeping Them Loyal
So, with that said, what are you doing to keep these people happily evangelizing on your behalf? One of the primary reasons airlines created frequent flyer programs was to reward the people who spent the most money on them. Ditto wine clubs and the plethora of rewards programs offered by grocery stores, drug stores and the like.
You can do the same thing, regardless of the nature of your business. Let’s say you sell electronics online. Your first move should be to review your sales data to determine exactly who those loyal customers are and get an idea of the nature of the purchases they make.
Once you know who they are and what they’re buying, you can craft a program they’ll find valuable and (more importantly) be inclined to use. The main thing you want to do is avoid putting together a program that looks good on paper but would actually turn your customers off, like this Starbucks faux pas.
A good start is the creation of a VIP membership. This could come with perks such as sneak previews of new items, reports from conventions like the Consumer Electronics Show, or free trials of new gear to let them see if they like it before buying. These gestures say to the customer; “We know who you are, we appreciate what you do and we want to make sure we’re serving your needs in the best way possible.”
You can offer exclusive end of the model year discounts to clear out merchandise, forum memberships, a newsletter and a host of other features designed to reward the customer, keep in touch with them and stimulate additional sales.
Even Better, it’s Cost Effective
Study after study has shown it’s considerably more expensive to convert a new customer than it is to keep an existing one. Further, a first-time shopper is considerably less likely to buy on their initial visit to your site. Meanwhile, returning customers purchase at a much higher rate. In other words, the money you spend to keep existing customers happy goes much farther than the money you’ll spend trying to attract new customers. What’s more, when you factor in their willingness to spread the word about your business, loyal customers are also your best advertising.