Rewarding Your Best Customers
By: Aarti Shah
It's no secrete that keeping old customers is a more cost-efficient marketing strategy than trying to recruit new business. Though earning customer loyalty is one area that small business owners might have an edge over major retailers - the trick is retaining customers without sacrificing the bottom line with endless promotions and discounts.
There are ways to entice repeat business without slashing prices, says Paul Lemberg, CEO and chief business accelerator at Axcelus and author of Be Reasonable. The first step is being organized so that you can target your outreach efforts. While some business go to great lengths to develop an elaborate tracking system, depending on the size of the company, a card file or spreadsheet can be enough.
For particularly savvy business owners, this collected data can be used to make future suggestions to consumers, he says. For instance, if a customer buys a vacuum cleaner, you can send them a reminder message when it is due for service, and offer two free bags when they come in.
Another enticing way to show appreciation to repeat customers is offering them some kind of exclusivity, Lemberg suggests. Send invitations to established customers, inviting them to a private sale and emphasizing that it is for repeat customers only, Lemberg says.
"Exclusivity drives people crazy," he says. "They will really want to be your repeat customer."
Yet business owners should make sure their loyal customers don't come to expect discounts. Rather than offering sales, business owners could offer bundling specials that give customers a free item with another full-price purchase. While this tactic still hurts margins, it doesn't suggest that the full-price is too high, Lemberg adds.
Another tactic that coffee shops have successfully implemented is the loyalty card, rewarding repeat purchases with a free item. But a loyalty program doesn't fit with all business schemes. Instead, Lemberg suggests using an inverse loyalty plan that rewards customers for buying in advance.
"If you've got a carpet cleaning service, make it so that if they sign-up for a whole year they get a discount," he says.
Jeanne Rossomme, founder of RoadMap Marketing, suggests small business owners consider when their customers are likely to repurchase. For restaurants, it's likely to be around anniversaries or occasions, or for pet supplies it could be every six months.
Though customers are more likely to feel emotionally-invested to small businesses, the owners often do not know how to use this connection to boost business. Rossomme says small business owners shouldn't be afraid to ask for referrals from clients.
"Word-of-mouth is becoming a more powerful source because people are just overwhelmed with all the direct mail bombardment," she adds.
Even the most alluring offers can be tossed aside into a stack of junk mail if business owners aren't careful to tailor their outreach tactic for repeat business. Rossomme suggests ranking customers, and reaching out to each level with tactics that match the customers' interest. Frequent customers could get a phone call about upcoming discounts, while the average customer could get an occasional e-mail, and the one-time customer could get a direct mail offer.
Additionally, the business owner or another experienced employee should handle the outreach. Having inexperienced or transient employees handling promotions could backfire, especially when speaking to a customer who is already familiar with the business.
"If they owner is trying to decide where to put their time ??? they need to put their time there," she adds.
Some even say an old-fashioned thank you system should be built into the company's purchasing model, as the best way to ensure repeat business.
"You have to make sure there is some way to thank customers on a regular basis," says Carl Woodard, chairman of marketing for the Orange County division of Score, a network of small business counselors.
Though most business owners do not have time to issue personalized notes, bag stuffers with coupons or flyers about future sales can be enough to win repeat business. No matter what tactic, it's key to remember that repeat customers are the best advocates for a growing business.
"Repeat business should to be baseline that you can count on," says Lemberg. "Then new business is where the velocity of the growth is."
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