Blog/Beyond Texting

Repeat Customers: Why and How to Create Them

Repeat customers are critical when it comes to growing your business. Find out why you should be prioritizing their loyalty, and discover the best ways to do it.

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One of the first places you can look when your business needs to increase revenue is existing customers.

Studies show that 41% of a store’s revenue is made up by just 8% of its customersthe ones who keep coming back. 

Return customers are more likely to spend more money. They buy new products and they’re key to bringing in new customers through word of mouth and recommendations.

Of course, customer acquisition is important when building a profitable business. However, we’re going to show you why it’s important to keep your current customers coming back for more.

The Importance of Repeat Customers

Return customers and new customers go hand in hand. 

We’ve all walked past empty restaurants in favor of a more busy one. Why? Because seeing other customers enjoy your business makes us feel like we’re missing out.

We want some of what they’re having, and we trust that there’s a reason for a business being popular. 

Let’s take a look at why else customer retention should be a focus.

Customer Retention Is Cheaper

You don’t need to educate and encourage repeat customers through the door. Your repeat customers know who you are, what you do and why they’re coming to you for the service or product. It’s why customer retention is 5- 25 times cheaper than customer acquisition.

Repeat Customers Spend More Money

Your repeat customers trust you, so they’re more likely to make bigger purchases. It’s one of the reasons why returning customers spend 300% more than new customers.

You Can Test Out New Business Ideas

Repeat customers make great testers for new products and services. As they already like what you offer, they’ll be more willing to try something new.

Loyal Customers Are a Free Marketing Channel

90% of people trust recommendations from friends and family. Word-of-mouth alone is a powerful marketing tool, especially if the shout-out makes it to social media. Instagram and Facebook posts could reach hundreds of people, all because you kept one customer happy. 

How to Create Repeat Customers

The good news is you don’t need to break the bank to create repeat customers. In fact, acquiring new customers can be five to 25 times more expensive than keeping existing ones.

Here are 4 easy ways you can ensure customers keep coming back for more. 

1. Prioritize Excellent Customer Service

Due to the focus businesses place on acquiring new customers, return customers can be left feeling less important than new ones. All it takes is one bad experience for your customers to be seeking out your competition.

Good customer service is key to improving customer satisfaction and retaining customers new and old. You can do this by:

  • Establishing thorough procedures for the customer service team to follow. This will educate them on how to interact appropriately with customers.
  • Reward employees who excel within the customer service team. Creating healthy internal competitions will benefit your customer and build a strong team.
  • Automate your customer service responses with templates and FAQs. Many SMEs can’t afford a full customer service team, but that doesn’t mean your customer experience has to suffer. Use  automation to speed things up and ensure your customers receive timely responses.

Your customers should always receive the same, high-quality service from beginning to end.

2. Offer Feedback Opportunities

Customer feedback is an essential part of growing and evolving your business. Not only should you have an understanding of why customers stay, you should also find out why they leave.

Collecting feedback should be a proactive process, rather than reactive to poor feedback. The customer feedback loop includes collecting, analyzing and acting on feedback, and it will be instrumental in retaining your customers. 

3. Start a Loyalty Program

We’ve already mentioned the importance of ensuring your return customers don’t feel second best, and rewards are a great way to do this.

Incentivizing customers is about more than ‘buying’ their service. It’s showing your appreciation and value for their custom.

From apps to punch cards to SMS and email offers, loyalty programs can take a variety of forms. 

We talked to Club 1 Hotels about building their SMS loyalty program

Pierce Hutchings, SVP at Club 1 Hotels, told us it didn’t take long for him to realize there was a disconnect between the business and its customers. The hotel’s strategy of sending 2-3 emails per week resulted in an open rate of just 20-24%.

Upon introducing an SMS-based loyalty program, only 3% of customers turned down the opportunity to join and the open rates of his texts are 97%. 

According to Pierce, “You know right away how many people looked at the message, how many clicked on the SMS. People don’t wait a week to come back to their text messages, it’s an instantaneous way to see results.” 

4. Use a Multi-Channel Communication Strategy

You need more than one way to reach your customers. 

Reminding customers of your existence is critical to driving repeat purchases. It’s a simple philosophy that applies to your business whether you rely on SMS, email, or social media. The less times a customer visits your store, the more likely they are to go elsewhere next time. 

SMS and email are both particularly effective for personalizing the customer experience. By dividing your audience according to their buying patterns, you can build a tailored marketing strategy.

Giving yourself a multi-channel presence also offers customers the opportunity to reach out to you in return. 

Being accessible through a variety of channels shows them you’re happy to address any questions or complaints. 

Customers want transparency, and active communication plays a big role in showcasing this.

How to Measure Repeat Customers

If you’re not tracking your repeat customers, now is the time to start.

Every store has two types of customer, return and new.

The repeat customer rate (RCR) is calculated by dividing your return customers, or those who have made multiple purchases, by your total number of customers over that same period. You then multiple this by 100 to turn it into a percentage.

For example:

If you had 800 customers make a purchase in November total, and 520 of those are made by return customers, your calculation would be: (520 + 800) x100 = 65.

Your repeat customer rate would be 65%.

While there’s no clear metric for what a ‘good’ RCR is, most businesses aim for a 25-30%. Ultimately, however, it depends on the business itself, including the services or products on offer and the industry.

Grow Your Business Through Repeat Customers

Repeat customers are a pivotal part of growing any business. While attention needs to be paid to acquiring new customers, it’s those who keep returning that will keep your business afloat. 

Use the RCR calculator to measure your repeat customers and find out if you should be spending more time on keeping them happy.

Make the most of those who love your services and products by rewarding them for their loyalty. They’re providing you with free marketing, after all. 

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