Roughly 50% of new businesses fail within 5 years of starting out.
How crazy is that?! It means roughly 1 in 2 start-ups will fail within half a decade.
Of course, businesses meet an untimely demise for any number of reasons. They might miscalculate the market or struggle with cash flow problems. They may struggle to get people through the door, differentiate themselves from the competition, or market their products/services effectively.
But, ultimately, it almost always comes down to customers.
To be more specific, successful businesses have an abundance of returning customers. Sure, it helps to attract new ones in their droves as well! But the real magic happens when they’re adding to an ever-burgeoning customer-base.
Looking to succeed in business and need persuading about the benefits of repeat customers?
Keep reading for 7 key reasons to prioritize repeat buyers in the bid for business growth.
1. You Need Snowballs Not Turnstiles
Business is stressful when customers come and go at the same rate.
Of course, all businesses are on a perpetual hunt for new clients. But the task is downright essential when you fail to keep your old ones.
You end up with a turnstile effect, where current customers leave as fast as new ones arrive. The result is a constant fight for survival; your customer base grows at a snail’s pace- if it grows at all.
Repeat customers are an antidote to the problem.
They come back for more as new customers arrive for the first time. You end up with a delightful snowball effect developing! It’s growth on top of growth, with a compounding customer base that sees your sales skyrocket.
2. Customer Retention Is Cheap
Relative to their acquisition, anyway.
Think about how much money you spend on acquiring new customers. You have to pay for ads to generate leads, a marketing team to manage the campaigns (or an inbound marketing agency), and salespeople to seal the deal. And those are just a few of the costs involved.
All told, you’re looking at serious money to generate new leads and customers.
Customer retention has none of those overheads. As such, focusing efforts on repeat customers promises to increase your margins. You’ll generate sales at less expense, leading to newfound profits to put back into the business.
3. Customer Retention Is Lucrative
The good news doesn’t stop there.
It just so happens that loyal customers are lucrative customers too!
They’ll buy from you with greater frequency and spend more money in the process.
This makes logical sense. After all, these people know and trust your business already. They’ve bought from you in the past and realize the value you provide.
From their perspective, there’s less risk of a disappointment compared to first-time buyers. The result? They’re far more inclined to hand over their money!
4. They’ll Buy Your New Releases Too
Investing in customer retention isn’t just about the here and now.
It’s about the future as well. Why? Because loyal customers are far more likely to pay for new products or services as well.
Remember, you’ve done the hard part and earned their trust. They’ll come back for more of your current inventory/offer- that’s one good thing. But you can rely on them to be first in line for future products too.
Think about people who love Apple products. The company is a master of customer retention! They know, without a shadow of a doubt, that their loyal mass of fans will buy anything they release. It helps take the risk out of business decisions.
5. Customers Feel Valued
A sense of entitlement comes with being a customer.
After all, you’re handing over your hard-earned cash. You expect the product/service to be of good-quality, solve your problem, and provide good value for money.
Just as importantly, though, you expect gratitude from the company!
And nothing expresses that gratitude more than being encouraged to come back for more. Think about it, companies that are focused solely on acquisition are less likely to express sincere thanks.
It’s all about the transaction. As soon as the money’s exchanged hands, it’s onto the next one.
By comparison, focusing on client retention is all about cultivating a relationship. It’s about letting customers know that they’re valued and creating a sense of connection. Customers appreciate those efforts and become ever more loyal to your brand.
6. You Cultivate Referrals
As you know, client referrals are a big deal.
It’s free marketing! A satisfied customer suggests your service to their friends and family, creating highly-qualified new leads. Conversions and revenue follow soon afterward.
Now, there are two ways to get word of mouth referrals:
- Referral programs, where you actively incentivize referrals from customers, and
- Providing so much value and cultivating so much trust that loyal customers do it anyway.
The second route to referrals is true gold-dust. Word of mouth referrals spread naturally, with no effort on your part. You’re not buying them, twisting anyone’s arm, or manipulating them.
And they’re far more likely to start happening when you focus on client retention. It’s a natural by-product of providing supreme value to existing customers! They’re so happy with their experience that they can’t help but recommend it to others.
7. There’s More Room for Mistakes
Businesses tread a very fine line with their customers.
One wrong move can cost them huge sums of cash. A single bad review or customer service complaint can cause new prospective customers to look elsewhere.
Unless that is, you’ve invested in repeat buyers and earned their trust. Loyal customers are more forgiving! Just like any relationship, it’s easier to forgive somebody you know and value.
The result? Less pressure on your profits; less risk of making mistakes from which you can’t recover.
Time to Focus on Returning Customers
New businesses have a 50/50 chance of success or failure.
They’re hardly odds to inspire confidence in fresh-faced entrepreneurs! Thankfully, though, there are numerous methods with which you can improve your chances of success.
As we’ve seen, investing in returning customers is one of them. Hopefully, this post has explained why that’s the case and convinced you to focus your attention on this aspect of the business.
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