There’s a popular industry statistic that the cost of acquiring new customers is five to ten times greater than the cost of retaining existing ones. The statistic also indicates that repeat customers spend more because they trust their suppliers. Focusing on growing business with existing customers is just as important as winning new customers. There are many simple techniques for growing existing business, from discounts for repeat purchase to account management programs. Their common aim is to increase the lifetime value of a customer.
Monitor lifetime customer value – Lifetime customer value is an important metric for growing businesses. It measure how much a customer spends over the time they deal with your business. That highlights the importance of repeat business and also helps you identify your most important customers. Maintaining customer purchase histories helps you calculate lifetime value.
Calculate customer acquisition costs – An important part of the lifetime value calculation is the cost of acquiring each customer. Acquisition costs, which include sales initiatives and marketing campaigns, can also help you calculate the return on your marketing expenditure. Although it can be difficult to attribute acquisition costs to individual customers, a realistic estimate may be sufficient.
Personalize your service – It’s easier to build repeat business when the additional products and services you offer are relevant to your customers. By personalizing the offer, you can increase your chances of a successful repeat sale. Maintaining records of each customer’s purchase history, product or service preferences, inquiries and response to sales or marketing initiatives helps you tailor individual offers. A customer relationship management (CRM) system can automate that process
Offer discounts for repeat purchase – A discount on the next purchase or series of purchases is a simple way to build repeat business. You can offer the discount before or after the initial purchase. With services, you could offer lower rates to clients who sign up for six-month or annual contracts, rather than one-off projects.
Discuss customers’ future requirements – By taking a proactive approach, you can build a trusted relationship with customers and increase their loyalty. Holding review and planning meetings gives you the opportunity to understand future requirements and plan relevant offers.
Introduce account management – Giving sales staff responsibility for account management as well as new business development gives greater emphasis to growing existing business. Account managers build relationships with specific customers and ensure that the company provides them with a quality service. Check that you appoint staff with good relationship skills, rather than strong selling skills.