Who is your best customer? Do you know? If you read the first part of this post and didn’t find your top buyer, do it now.
Acquiring customers is hard.
And, it is very expensive, with costs rising every day. Yet, many companies forget about new buyers as soon as they make their first purchase.
They don’t realize that the heavy lifting begins when shoppers make that first purchase. It’s the only way to move people from hit-&-run shoppers to long-term loyal customers is to provide a level of care that consistently surprises them.
The first step is knowing the difference between one time event buyers and potential lifetime customers.
Both can be hit-&-runners, but the event shoppers will NEVER become a loyal buyer. Investing resources in them is a ROI wasteland.
For example, my daughter who redefines “girly” when it comes to fashion decided to sport a Goth look for Halloween. After purchasing a few accessories online, I’ve apparently been flagged as a Goth Princess. I emailed the catalog company to tell them that it was a one-time deal, but the promotions keep coming. I’m in that black hole of new buyer with a purchase in the last sixty days. Eventually I’ll be cycled out of the marketing strategy but until then, every penny they invest is lost. Every one.
Once you’ve identified someone as a potential lifetime customer, work hard to move them to the second and then the third purchase.
If a person has purchased from you for less than three times, they are an event buyer or a tester. Do not count them as buyers.
The third order is the crossover for a loyal customer relationship 92% of the time (based on our analysis for clients over the years.) It’s when individuals begin to trust your quality and service. If you aren’t consistently moving people to that third order, your marketing and customer care are failing.
The best way to consistently deliver results is to have a three-phase customer retention strategy.
The first phase has two objectives:
- Identifying event buyers and hit-&-runners
- Motivating everyone else to make that third purchase
The second phase is your customer care stage. It is my personal favorite because it allows you to show your customers that you care. The strategy you choose depends on your unique corporate culture. It needs to fit your core competencies and customer expectations.
The third and final phase is reactivation. Good customers cycle out of buying patterns. Sometimes they have completed their lifespan. Sometimes a life event such as unemployment, marriage, divorce, relocation, etc. pause their purchase activity. The reactivation phase invites them back.
Acquisition is important because your company needs it to grow. The customers completing their life cycle need to be replaced and new ones added to increase market share.
Retention is more important because your company needs it to be profitable. Newly acquired customers are an expense. Retained ones are an asset.