Reeling Them In: The Importance of Customer Retention and Product Reorder
When I first moved to my current neighborhood, I explored the area and came across a coffee shop within walking distance from my house. As a new customer, I was drawn in by the extensive menu, store decorations, and cozy interior populated by people of all ages. Over the next few months, I visited most days of the week and soon became a neighborhood regular.
Customer Retention Strategies and Revenue Sources
For both large companies like Starbucks and Amazon and smaller businesses like my local coffee shop, regular customers, or repeat purchasers, contribute a significant portion of a brand’s revenue. In fact, only 8% of this subset generates 41% of a business’ total revenue. While acquiring new customers will remain an important goal for marketers, there is overwhelming evidence to encourage them to focus their efforts on customer retention and product reorder.
New Customer Acquisition is Expensive
It is more cost-effective for brands to retain customers: not only can it cost up to 5 times more to acquire new customers, but a 5% increase in customer retention rates can increase a brand’s profits by up to 95%, according to a study conducted by Bain and Company. According to a recent consumer study, a customer who makes an initial purchase has a 27% chance of later returning to the same store, while a customer who returns and makes a second purchase has a 54% chance of eventually making a third.
These numbers depict a narrative that highlights the importance of consumer loyalty and satisfaction. I often recommend brands or restaurants that have provided great products or service to my friends, and this is a repetitive cycle that has in turn introduced me to some of my go-to brands and locations as well. Unsurprisingly, repeat customers are more likely to refer a business to potential customers and are more willing to try a brand’s new products. Additionally, loyal customers can give marketers valuable feedback that will further improve the customer experience.
It's Not Just Customer Service
There are a number of classic strategies that marketers can employ to increase retention rates and drive customer loyalty. These include targeted email communication, discount loyalty programs, social media rewards, content personalization, and sustained communication with customers. However, with the rise in ecommerce during the pandemic, consumers are increasingly taking control of their shopping experience, which underscores the importance of an easily-accessible and user-friendly digital experience. One way to accomplish this is through having an efficient product reorder process.
Product Reorder and Your Customer Loyalty Program
At its most business-oriented essence, your customer loyalty program (often referred to interchangeably as a customer retention program) is all about efficient and forecastable product reorder. As mentioned above, it's a well-cited fact that getting new customers is expensive. However, it can be equally as expensive if an existing customer wants to reorder but is met with friction during the reorder process. To that end, it's just as important to inspire your customer base to reorder as it is to make it easy for them to do so. Threading that needle is key to expanding your customer lifetime value, no matter what industry you're in.
Customer Feedback and the Value of Being Heard
Another benefit of focusing on customer loyalty is the frequency of referrals that can stem from strong brand loyalty bonds. Word of mouth may not be as far-reaching as your Facebook ad campaign, but it's a much more powerful brand engagement mechanism in terms of converting people into customers. Oftentimes customer support is seen as a cost center meant to minimize any damage that a negative experience has produced; however, an engaging customer service interaction can minimize customer churn, increase repeat purchase rate, and contribute to growing average order value.
It may sound too good to be true, but converting complaints into customers is achievable simply by participating in dialogue. In other words, active listening - and giving customers a vehicle for this dialogue - is extremely valuable. This is why the popularity of live chat features on websites has soared in recent years. If someone wants to engage a business (even if by way of a customer complaint), the business will maximize its return on that interaction by allowing the customer to be heard as soon as possible.
Customer Retention Metrics
Repeat customer rate, churn rate, purchase frequency, acquisition costs - all of these provide valuable insight into understanding how successful your customer retention tactics are. And while it is tempting to look for external benchmarks or averages, these do not always uncover the whole truth - nearly all businesses have unique components which influence the relevance that any given metric has to their bottom line.
More important than any single metric is that marketers integrate transparency and loyalty-building tactics. Any retention strategy that isn't rooted in these foundations is likely doomed from the start. And to that end, removing friction from customer support conversations is one of the most important contributing factors to increasing the number of orders from a given customer. To put it plainly: brand ambassadors are built, not born.
Improving Customer Behavior - One at a Time
Brij’s one-touch product registration and reorder solution provides value to both brands and their customers. With the simple scan of a QR code, customers gain access to not only product information, discounts, and exclusive content, but also to a user-friendly platform on which they can repurchase a product. Instead of going in-store for repurchase, which increases the chances that a customer discovers other brands, customers can accomplish their to-do list with just one touch.
Customer satisfaction and product reorder work in tandem, and the latter can mean the difference between a one-time visit and becoming a regular.
