When running a business, there are various strategies to attract customers, but many business owners find it difficult to attract customers as expected. In such cases, what you should be aware of is “repeater”. Of course, it is important to make efforts to attract many customers, but focusing on acquiring repeat customers will lead to efficient sales. For companies and managers who say, “Customers leave quickly and do not continue to purchase services,” there may be some reasons for this, such as the measures they are implementing or the content of their services.
In this article, we will explain the importance of repeat customers, their benefits and precautions, and points to help you acquire repeat customers smoothly.
What is a repeater?
First of all, what kind of situation does a repeater refer to? Even if people understand it in words, there are many people who find it difficult to explain it. First, I will explain the overview and definition.
Customers who purchase a certain product multiple times
Repeat customers are customers who continue to purchase products multiple times because they are attached to or have a good impression of the product. Of course, everyone is a new customer at first, but many of them become repeat customers if they have a positive impression of the product they used, such as a product that provides the value they are looking for.
One of the necessary elements to increase sales
There are elements that are necessary for increasing sales in management, but these are mainly the following three elements.
By improving these factors, you can increase sales and achieve stable management.
Repeat customers are also a necessary element in management to improve sales, and if you want to run a business, it is an element that needs to be continually improved.
How to calculate repeat customer rate
The rate of repeat customers among existing customers can be calculated using the following method.
Repeat customer rate = number of customers who made repeat purchases ÷ total number of customers × 100
For example, if a store has 500 customers per week and 100 of them visit the store more than once, the calculation is (100 ÷ 500) x 100 = 20%.
Repeat customers lead to efficient sales increase
Whether it’s a physical store or an online business, the presence of repeat customers leads to an efficient increase in sales, and it is no exaggeration to say that it is essential for a successful business. There are laws such as the “1:5 rule” and the “Pareto principle” that support this reason.
1:5 rule
There is a law in business called the 1:5 rule. To put it simply, the law says, “To acquire a new customer, you need to spend five times as much to acquire a repeat customer.”
In other words, acquiring new customers requires a lot of cost and effort in business. Of course, you should take measures to acquire new customers, but if you want to grow your business efficiently while keeping costs down, increasing repeat customers is extremely efficient. By taking measures to increase the frequency of use and store visits, it is possible to improve cost performance and increase sales.
pareto principle
There is another law called the Pareto Principle. This is also known as the “80:20 rule,” and it can be summarized simply as “80% of the total value is produced by 20% of the elements that make up the whole.” Translating this into the content of this article, it can be said that 80% of sales are generated by 20% of repeat customers.
Once you understand this law, you will be able to better understand the importance of repeat customers. If you can build strong relationships, you can expect stable sales of 80%.
5 benefits of acquiring repeat customers
Repeat customers are a very important element in management, and there are many benefits to acquiring them effectively. The following five points are mainly mentioned.
Stabilization of sales
Sales are the most important thing in order to continue a business. It is of course important to increase sales, but also to stabilize them. In such a situation, customers who purchase products regularly and continuously can become the support of business sales. Because they have a favorable impression of companies and products, they are proactive about making purchases, and serve as the basis for sales.
Advertising effects through word-of-mouth transmission
Repeat customers will share their favorite products with their friends, and the services they had a good experience with, giving them good word of mouth. For example, if a product receives good reviews on social media, it may lead to a purchase by potential customers who are interested in the good reviews.
By sending out good word of mouth in this way, it can be spread, leading to the acquisition of other customers and an increase in the number of repeat customers. Especially in modern times, it is rare to find people who do not use SNS, and the dissemination of information and word of mouth through SNS can have a huge advertising effect.
Reducing the cost of attracting customers
Another good thing about acquiring repeat customers is that you can reduce the cost of attracting customers. As mentioned earlier, it costs 5 times more to acquire a new customer than to acquire a repeat customer. Rather than spending a large amount of money to attract customers, it is more efficient to increase sales by keeping costs low and attracting repeat customers.
This is especially important for newly opened stores or businesses that have only been in business for about a year. If you have not started your business many years ago, you often do not have much financial resources. Although you would like to take some measures, there are many cases where you cannot afford to spend a lot of money. In such cases, we recommend focusing on measures to attract repeat customers.
Improving LTV
Improving LTV is also a big benefit. LTV is an acronym for “Life Time Value,” which in Japanese means “customer lifetime value.” This value shows how much one customer purchases your company’s products during their lifetime, and how much profit they bring in total. When I say “lifetime,” I don’t mean “a person’s lifetime,” but rather how much profit they bring from the time they purchase products and start trading until they end when they no longer use them. It is an indicator to represent.
Increasing LTV makes it possible to reduce operating costs and stabilize profits, which has a positive impact on management.
Can be linked to cross-selling and up-selling
By increasing the number of customers who continue to purchase products multiple times, you can lead to cross-selling and up-selling.
Upselling is one of the sales methods used to increase the customer’s unit price, and it means proposing a higher quality product than what they have already purchased or are planning to purchase. Cross-selling is also one of the sales methods used to increase the customer’s unit price, and it means proposing other products related to the product they are trying to purchase and getting them to purchase them as well.
Repeat customers have the effect of stabilizing sales through transactions, but by connecting them to cross-sells and upsells, they can further improve LTV.
Points to note when acquiring repeat customers
Customers who continue to purchase your products or services multiple times are very important, but there are some things to keep in mind. Let’s understand the precautions and take action.
We also carry out measures for new customers.
In order to effectively increase and stabilize sales, it is very important to acquire repeat customers, but we also recommend that you take measures to attract new customers at the same time. It may be a good idea to put a little weight on it, but once your business is on track or sales are stable, it’s a good idea to increase the cost of implementing measures to acquire new customers. Changing the weight of measures at the most opportune time and determining which measures to implement in light of the business situation are also ways to test a manager’s skill.
always make improvements
It is also important to devise measures to attract repeat customers. If you interact with all customers in the same way, they may become bored and stop using your product or service. It is important to think about what kind of interaction and approach you can take to improve customer satisfaction and make them want to use your product or service again.
What are the reasons why the number of repeat customers is not increasing?
You may have understood that acquiring repeat customers is important, but I think there are many business owners who are worried that they are having trouble acquiring repeat customers. There are clear reasons why this does not lead to acquisition.
existence is forgotten
The reason why repeat customers do not increase is that the customer does not leave an impression in the first place and is often forgotten. It’s not that they have a particularly bad impression of the product or service, but because they didn’t have a particularly strong impact, customers forget about it. Even though they didn’t leave a bad impression, it would be a shame if they didn’t buy it again.
If you use memorable sales methods, catchphrases, and points of differentiation that your competitors don’t have, you will be able to make a lasting impression on your customers.
No special measures taken
However, simply providing products and services will not lead to repeat business. It is important to implement measures to ensure that customers continue to purchase products and services multiple times.
For example, we provide point cards and membership cards to new customers, giving them an opportunity to make their next purchase, and sending out advantageous information via email or official LINE. It is important to provide opportunities for people to want to use our services again. By implementing special measures, you will be able to leave a good impression on your customers, so be sure to implement them.
Poor quality of products/services
If the quality of your product or service is poor, customers will not want to use it again. Customers are paying to use products and services, so if the quality of what they purchase is poor, it will naturally lead to dissatisfaction. Possible reasons why customers are dissatisfied include:
These problems are issues that will affect the continued operation of the business, even before acquiring repeat customers. Let’s deal with it as soon as possible. Additionally, there are some points that you may not notice within your company, so we recommend checking by conducting customer surveys.
7 points for acquiring repeat customers
Repeat customers can earn points efficiently by keeping a few points in mind. Please keep in mind the following seven points.
Create opportunities to encourage repeat visits and repurchases
By creating an opportunity for customers who visit your store or customers who have made a purchase to come back to your store or make a repurchase, they will continue to make purchases. For example, the following efforts are effective.
If they remember the existence of your store and see the benefits of making multiple purchases, they will likely come back to the store and make repeat purchases.
Try to connect regularly
In order for customers to visit your store and make purchases multiple times, it is important to regularly remind them about your company and products. Even if a product is very good, there are many cases where customers do not become repeat customers because they are not very impressed and are forgotten. It’s such a waste that customers don’t come back or buy from us again even though they have no complaints. Make sure to send out information on a regular basis so that people will be reminded of your company and store regularly. For example, the following efforts are effective.
make you feel special
Among your customers, it is extremely effective to encourage customers who visit your store and make purchases multiple times to make them feel special. For example, rather than just holding an event, it will feel more special to offer special information to regular customers. By taking an approach that brings you closer to your customers, you can give the impression that you value your customers.
Additionally, if you are selling a product, you can increase satisfaction by offering a service like “We’ve released a new product and we’ll give you a free sample” to those who regularly purchase your product. This will lead to an improvement in Customer satisfaction may lead to not only continued purchases of the product, but also the continued purchase of the free samples that were given to the customer. It’s a good idea to start with small considerations so that they don’t become a burden.
In the case of stores, it is possible to express a sense of specialness not only through the actual service, but also through the way you speak and serve customers. Instead of just expressing gratitude, by adding your name or “Thank you for always using our service,” such as “Mr. I can feel that they remember me.
Increase the number of times you are seen by using SNS etc.
It is also important to increase the number of times your products and services are seen by using SNS etc. In modern times, it is rare to find people who do not use SNS, and the transmission of information through SNS has a huge impact. Therefore, by regularly posting information about your store and products on SNS, more people will see your store and products, and you will feel more familiar with them. SNS has a strong spreading power, so when people who are interested in a post take action to spread it, a chain of spread occurs, allowing many people to see the information.
Another good thing about SNS is that you can communicate with users. You can send words of thanks to users who have left reviews and impressions about products, etc., and you can also respond to users who have questions about things on SNS. This is recommended because other users who see the interaction will also be interested.
listen to your customers
Requests and complaints from customers are great opportunities for business development. In most cases, if a customer is not satisfied with a product or service, the request or complaint is not communicated and the customer simply goes to another company in the same industry. If you let us know your requests and complaints, there is a possibility that you will become a continued customer if we can make improvements. Therefore, it is important to listen carefully and respond honestly.
In addition, feedback about products can provide great hints for further improvements. There are some areas for improvement that we may not notice on our own, so having them complete surveys and post reviews is effective. Let’s collect feedback from buyers and make improvements.
Avoid methods that rely solely on cheapness and value.
One way to attract customers is by lowering prices, but it is best to avoid relying solely on low prices and good deals to attract customers. This may be a good idea if you are just starting your business, but there is a possibility that your customers will leave when the price increases. There is also the risk of price competition when competitors offer lower prices.
If you want to attract customers by lowering prices, it is best to implement measures such as selling at a special low price in the form of an “opening commemoration”, and then selling at the regular price after getting people to feel the quality of the product. Sho.
create a community
Some companies create community-like gatherings for repeat customers. By utilizing community-like gatherings and holding events, customers can interact with each other. Since it is a limited event, you can feel special, and it can also be an opportunity to deepen your attachment to the company and products.
Additionally, if you are running a restaurant, we recommend offering services such as inviting regular patrons to a tasting session of new menu items. It’s a great event for customers to be able to taste new menu items ahead of time, and it’s very appealing. If you can feel that the food is delicious, you will be more likely to visit the store.
Consider strategies based on customer type
While it is important to effectively acquire repeat customers and stabilize sales, it is also important to consider strategies depending on the type of customer. This is because the effective approach method varies depending on the customer. From here, I will explain how to approach three types of customers: first-time customers, loyal customers, and drop-off customers.
first time customer
For first-time customers, it is important to give them an opportunity to visit your store for the second time or make a purchase, and to give them a positive image such as “the store has a good atmosphere.” We recommend the following efforts.
good customer
A loyal customer is someone who is already a repeat customer or whose cumulative purchase amount is higher than average. Make sure to treat your loyal customers in a way that makes them feel special and treat them better than other customers. We recommend the following efforts.
Leave customer
Customer abandonment refers to customers who have passed a certain period of time since their last purchase. Most people have already forgotten about the store, so try to remind them of the items they previously purchased. If you implement measures that allow you to purchase at a good price, there is a high possibility that you will become interested again. We recommend the following efforts.
summary
In this article, we explained the importance of repeat customers, their merits and precautions, and points to effectively acquire them. Having customers visit and purchase multiple times is a key point in improving sales for management. It is good to take measures to acquire new customers, but if you are aiming for stable management, try focusing on acquiring repeat customers first. If you always think “What can I do to make my customers want to use my product again?” and take action, you will be able to make your customers think “I want to use your product again.” It’s not easy, but let’s keep the basic points in mind and run a stable business.