If you don’t already rely on repeat customers for your business, you’re missing out on a goldmine. Likewise, if you’re spending too much time and money trying to find new customers, you’ll step on a landmine.
Statistics show that the probability of selling to existing customers is 60% – 70%, whereas it’s merely 5% to new prospects.
Even if you wanted to do the hard yards with new customers, it’ll cost you seven times more to acquire new customers compared to retaining your current ones.
So why are more businesses (44%) so focused on new customers or new leads when only 16% work on retention?
It could be the thrill of the chase, or they might not understand the value of their existing customers – their mindset is often “I’ll get them to buy from me once and that should be enough.”
That’s shortsighted and very damaging for any business in the long run. For most businesses who know what they’re doing, 65% of their revenue comes from current customers. Many of them have some sort of loyalty or rewards program that their customers love.
You may think that loyalty programs could just be fluffy hearsay. But these five stats don’t lie:
1. 83% of customers will do business with you if you have a loyalty program
Think about it – you don’t have to try so hard to sell your products, spend thousands on marketing campaigns, and advertisements or figure out how these ever-changing social media algorithms work. When you have an enticing loyalty program in place, your investments are almost minimal compared to the returns you’ll get.
2. 53% are comfortable sharing their information with you (For the Love of money research)
When your customers are willing to share their basic personal information with you, this is priceless data that can exponentially accelerate your business growth all year round, pandemic or not.
By understanding what your customer wants from their own mouths, it will help improve your products, offers and overall shopping experience so you’ll retain their business and grow profits.
It’s like free market research that’s personalised only for your business which is an enormous value and benefit your loyalty program will give you.
3. Increase your customer retention by only 5% resulting in a massive 95% boost in profits
If you’ve heard about the 80/20 rule or the more widely used quote: “Work smarter, not harder” – this applies to your business.
Why would you want to spend more time and money than necessary looking for new customers when less effort is required t to retain your existing ones who’ll contribute to almost all your earnings?
Whether it’s offering your loyal customers further discounts, free gifts, referral offers or an opportunity to support their favourite charities, these are simple techniques that you can add on top of your current loyalty program offer to retain your best customers who will always want to shop from you.
Existing customers will contribute to almost all your earnings compared to trying to find new ones which will take more time and effort.
4. 71% of businesses who are turning over 100K a month or more have some sort of loyalty program
Whether you’re setting a goal to turn over $100k a month or are way past that, it goes to show that a loyalty program is an integral marketing component that will help increase and sustain your revenue.
It is impossible to lose money from a loyalty program because customers love a good deal. They love it, even more, when they feel involved in the overall purpose – such as contributing to a bigger cause or knowing that the more purchases they make will have an ultimate and bigger reward at the end.
The only question is what should your loyalty program entail so that it becomes your consistent profit centre.
5. Loyal customers are worth 10X more than their first purchase
Unless you’re lucky, most first-time customers will buy the minimum from you – they want to try you out first.
If they like your stuff, they’ll come back and invest more with you. This process repeats itself and when they buy from you more than two or three times, you’ve hit the sweet spot.
But how do you get your products or services at the top of their minds all the time?
You can do email newsletters, social media content, flash sales or seasonal offers. But you need to constantly reward them for choosing you – that will keep them coming back. It’s not the time to be calculative or as the saying goes “penny wise, pound foolish.”
For example, if they purchase a number of items from you, give them a couple of free items (your cost price per product is a few dollars and it will be minimal compared to your potential returns) – But your customers will appreciate this gesture to the moon and back by raving about your to their networks who may potentially be your first-time buyers too.
Your customers will appreciate this gesture to the moon and back by raving about you to their networks who may potentially be your first-time buyers too.
Alternatively, you can start having tier levels in your loyalty program for different customers based on how much they spend. Give them cash back or store credit at a small percentage that’s proportionate to what they’ve spent – and this increases steadily every time they spend with you.
Who wouldn’t want to buy from a business that has progressively increasing discounts based on how much they’ve spent?
You may need to do some research first and work out what works for your margins and that’s appealing enough for your loyal customers so that they stay with you for the long run.
If you find that your loyalty program isn’t working, it’s time to seriously look into it now because you don’t want to be left behind and lose everything that you’ve worked hard for.
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