Small business strategies for earning repeat sales and customer loyalty
Chapter 01: Introduction
You sent emails, bought advertisements, mailed postcards, and composed tweets, posts, and pins to get them interested.
You spent time with them on the phone, online and in person, explaining your business and earning their trust. Finally, after days or weeks or even months, your work paid off: You landed a new customer. Now what?
For many small business owners, the answer might be: Do it all over again-and again and again. Attracting and acquiring new customers is an essential and never-ending pursuit for all businesses. But there's also another way to grow sales that can be more effective-and cost-effective: Sell to the customers you already have.
Existing customers are your best prospects. Whether they realize it or not, they've already bought into the idea of your business, making them more receptive to your next sales and marketing messages. That's why the probability of selling to them is 60 to 70 percent, compared with 5 to 20 percent for a new prospect, according to the book Marketing Metrics. And the more customers buy from you, the more likely they are to recommend your company to others-which can result in even more business.
In this guide, you'll learn:
Why retaining customers can be even more important than acquiring them
Methods of generating repeat business and inspiring customer loyalty
How marketing automation software, like Infusionsoft, can help you grow repeat sales and retain customers
Strategies used by small business owners to keep customers coming back for more
Chapter 02: Why repeat business matters
All companies want loyal customers. And 82 percent of companies say that customer retention is cheaper than customer acquisition, according to research by the digital marketing firm Econsultancy.
But despite these facts, the same companies don't prioritize building customer loyalty: 44 percent focus more on acquisition than retention, while only 16 percent focus on retention over acquisition.
If you want to grow revenue, adding more names to your client list is an obvious solution. But unless you also focus on your existing customers, you could actually lose money even as you add customers. Gaining a new customer probably won't make up for losing one, considering the extra time and money you spent convincing the new person to buy.
Adding new customers may boost revenue in the short- term, but retaining them often makes a bigger impact on a company's long-term success. Research by the management consulting firm Bain & Co. found that across most industries, customer retention explained a company's profits more than any other factor, including market share and cost. Even a 5-percentage point difference in customer retention, the company found, consistently led to profit swings ranging from 25 to 100 percent.
Customer value: The long view
When you start a business-a yoga studio, for example-you simply need to get people in the door. But your goal shouldn't be to sell a class or two. Your real objective is to make the studio part of the customer's life for months or even years to come.
Nearly all businesses want long-term relationships with their customers. In the quest to close sales, however, they sometimes lose sight of the bigger picture. Calculating what's known as customer lifetime value helps you determine how much you can afford to spend on acquiring a customer and how long you need to retain her to make the transaction profitable.
The equation looks like this:
Sales amount x Number of transactions x Average retention time
If a typical customer spends $30 on yoga classes every month for a year, her lifetime value is $360. If you spent $100 on advertising and offers to get her in the door, you're making a profit. But if you spent $100 and she only sticks around for two months? You're actually losing at the sake of gaining a customer.
So how to increase the customer's lifetime value? Companies surveyed by Econsultancy named these tactics as the most effective:
- Improvements to customer services: 42%
- Personalized interactions: 34%
- Cross-selling/up-selling: 29%
- More effective use of data: 26%
- Customer segmentation: 24%
We'll cover strategies for earning more business from existing customers in the next section.
3 strategies for automating repeat sales
Back to our example: A first-time yoga class participant won't necessarily become a loyal yogi without strategic planning around her customer lifecycle. After the first class, how will you encourage her to sign up for the next? What else could you sell to earn more business from her? If she stops coming to class, how will you win her back? Here, we outline three ideas that any business can use to earn another sale with the help of automation software.
1. Send a welcome email — and make it count
In business, like most anything else, first impressions matter. In a survey by ClickFox, a provider of consumer experience analytics, nearly half of customers identified their initial purchase as the most critical time for a company to gain their loyalty.
Start the customer relationship right-and set yourself up for repeat business-by using automation software to send welcome emails after the customer makes her first purchase.
In an automated welcome email or series of emails, you could include:
A thank you to the customer for supporting your business
An introduction to your company, services, and values
Answers to frequently asked questions
Educational content, like blog posts or videos related to your offerings
Suggestions for related products
An offer for a discount on the customer's next purchase
The messages should primarily help the customer feel connected to your company. But they also present a sales opportunity in that they land at the time when she may be more interested in your business than ever: Welcome emails have an open rate of nearly 58 percent, compared with less than 15 percent for other promotional emails, according to Experian Marketing Services.
2. Ask for the upsell or cross-sell
Although classes are the main attraction at the yoga studio, you'd ideally sell complementary products and services to gain additional business from your existing customers. As you map out the customer lifecycle, you could pair related offers, like beginner classes and yoga mats (a cross-sell) or advanced classes and an all-day yoga workshop (an upsell).
Automation software can help you execute upsells and cross-sells through e-commerce tools and automated emails. In Infusionsoft, for example, you can display your upsell offer in the customer's shopping cart before she checks out. When she's buying a beginner class, she'll see, "You might also be interested in a yoga mat." To further entice her to buy, you could throw in a discount on the yoga mat.
These offers have practically become standard on e-commerce sites (notice how much of your homepage real estate Amazon dedicates to them). That's because the strategy works for e-commerce sites: 12 percent of website revenues are generated from product recommendations, according to Barilliance, a provider of personalized website technology.
You could also include your upsell and cross-sell offers in an email, whether it's the new customer welcome email or a separate email about the products you sell at the studio. One tricky part: What if you send a yoga mat email to someone who already bought a yoga mat from you? That's where segmentation comes in. Using automation software, you can apply tags-either manually or automatically, as the result of other automated actions-that ensure your offer reaches only the people who will find it relevant.
3. Remind them to buy again
It's the same strategy that doctors and dentists have used for decades, except you don't need a secretary to mail postcards. With automation software, you can encourage customers to make another purchase by scheduling automated reminder emails.
A timer triggers the email to be sent after a predetermined length of time. The yoga studio, for example, could check in with customers they haven't seen in six weeks: "Hi [First Name], we've missed you at yoga lately! Would you be interested in doing a class this week? Check out our schedule here, and let us know if we can answer any questions." Include links to make things easier for your customer (and easier for you to make a sale).
It's better to be proactive than wait and hope for a repeat customer. Customers may forget about making another purchase, but when reminders are automated, you never will.
How to grow revenue by focusing on existing customers
Nate Shaw, co-founder, Brooklyn Music Factory Brooklyn, N.Y.
When Nate Shaw started his business, his sales and marketing efforts consisted of one main strategy: flyers.
Having taught private music lessons for twenty years, Shaw had a customer base of sixty families when he opened Brooklyn Music Factory in 2010. He wanted the school to serve more children, so his strategy seemed obvious at the time: Reach as many families as possible. "I was focused entirely on growth, so I thought, 'I'll just keep flyer-ing the neighborhood,'" he said. "I literally think that's all I did."
But over time, Shaw began to realize that leads weren't his barrier to revenue growth. At the Brooklyn Music Factory, which offers both private and group lessons, students learn through games and, as they grow as musicians, by making music together in a rock band. It's easy to convince prospective customers that learning how to jam and write songs by playing in a band is way more fun than taking traditional piano lessons with the elderly neighbor. What's difficult is nurturing a multiyear commitment to music education, the hard work that makes the cool band possible.
Shaw's epiphany came in 2013 when more than fifty families quit the school over the course of one summer. The exodus was not only a business crisis, but a personal failure for someone whose mission is to instill in children a lifelong love of music.
"When fifty families leave, I'm freaking out about revenue streams; I'm freaking out about my employees. But more than anything, that totally bums me out," Shaw said. "That's fifty families who don't see music as a viable option because somehow, we failed them. It's heartbreaking."
Since then, Shaw has fundamentally changed the sales and marketing strategy behind Brooklyn Music Factory. When he adopted Infusionsoft in 2013, he dropped all the leads from his email list to focus on only his 130 customers. He asked parents about changes they wanted to see and invested in teacher training to ensure more consistent lessons. Instead of blasting everyone with the same message, he sends targeted, automated emails specific to students' musical interests. And he replaced his sales-heavy messaging with content that helps parents coach kids through musical challenges.
Shaw stopped trying to sell any and every customer on a class, like the parents who talked about Brooklyn Music Factory as if it were a music-themed babysitting service. New customers now commit to a ten-month contract as Shaw encourages families to join his community, one he hopes will be part of their lives for as long as ten to fourteen years.
And as Shaw focused less on leads, the business growth came, anyway. Thanks to highly engaged customers who refer other families, his email list has grown to 1,900 recipients-and since implementing Infusionsoft, revenue has grown four-fold. One of the hardest business lessons he learned turned out to be the most valuable.
"In the early days, I was proud of myself because I could close a bunch of sales," Shaw said. "I wasn't focused on the right thing, which was nurturing my family."
Chapter 03: Building customer loyalty
Most customers aren't automatically loyal to a business after their first purchase. Loyalty has to be earned, and a great product or service is only part of the equation. It takes effort to make customers happy-and to make sure they stay that way.
There's no one answer as to what makes customers loyal, but much comes down to customer service and communication. Here's what consumers told ClickFox, a provider of customer experience analytics, in a survey about what drives brand loyalty.
What makes you loyal to a brand?
- Quality: 88%
- Customer service: 72%
- Price: 50%
What's the best way a company can build exceptional loyalty with you?
- Providing exceptional 24/7 customer service: 34%
- Rewarding me for purchases, feedback, referrals: 20%
- Sending me exclusive and/or relevant offers and specials: 13%
Next, we'll cover strategies for increasing customer loyalty with the help of automation software.
3 strategies for gaining customer loyalty with automation
It's not always possible to offer personal service and communication to every customer, every time (at least not without falling behind on other aspects of the business).
Automation software can be your stand-in, staying in touch with customers like you would if you had the time.
Gonz Medina, CEO and co-founder of Blue Chip Athletic in North Kansas City, Mo., uses automation tools from Infusionsoft to supplement his interactions with customers of the sports-oriented screenprinting business, which spans both retail and custom apparel. Because about 95 percent of the sports teams who purchase custom orders are repeat customers, we asked Medina to share how using automation has helped him earn their loyalty.
1. Keep in touch — and not only at the times you expect a customer to buy
A sports team that placed an order one September will likely need to place another the next September. But Medina wants Blue Chip Athletic to be on customers' minds more than once a year. He uses an automated e-newsletter to check in every three months and tell customers about the other ways in which the business can meet their needs-like screenprinting family reunion T-shirts during summertime.
Bonus tip: Social media platforms are great outlets for staying in front of customers. If your customers don't follow you, send them an automated email inviting them to connect. Give them a preview of what you post, whether it's photos of new products on Instagram or how-to videos on YouTube.
2. Ask for customer feedback — and act on it
With custom work, mistakes are almost inevitable. Before Medina implemented an automated, post-purchase survey with Infusionsoft, he didn't always hear about bad customer experiences. Now, the software prompts a staff member to call customers who submit a negative review, allowing Blue Chip the opportunity to remedy the situation.
Correcting problems, Medina said, has landed the company some of its most loyal customers. "A lot of companies in today's world promise that they're going to conquer the world, that they're going to do A, B, and C. Once they get the sale, they do A, and that's it," Medina said. "Doing what we say we're going to do is one of our core values."
Bonus tip: Positive survey responses deserve action, too. You can gain even more from happy customers when you ask them for referrals. With automation software, a customer who selected positive survey answers can be tagged as a promoter of your business who will then automatically receive referral requests.
3. send a genuine thank you
Medina wants customers to know that there are real people, employees of a small business, behind Blue Chip's products. A week after placing an initial order, each customer receives a thank-you card from the company. It's handwritten by a Blue Chip employee, who receives an automated reminder to complete it. Automated processes also identify Blue Chip's top spenders so that staffers can send them additional thank-you notes and gifts, like coffee mugs.
The reaction, Medina said, has been astonishment, especially for the first-time customers. "They're just amazed that someone sat down and wrote them a handwritten note," Medina said. "They've never had an e-commerce company do that."
Bonus tip: Your most loyal customers deserve special treatment. Consider creating a loyalty club, using automation software to segment your best customers (using factors like spend or engagement levels). Show your appreciation for members with exclusive offers, like a special discount or early access to a sale.
We hope these tips help you bring in more business from the customers you've already gained and find new ways to inspire customer loyalty.