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Nurturing Customer Loyalty

Jul 1, 2011
by Eric Leuenberger

If you want to increase profits, start looking internally. Shifting your sales focus from new customers to loyal customers is one way to increase your sales dramatically. I'm not saying you should stop looking for new customers; however, it makes sense that your ideal prospect is one that has already purchased from you in the past. We can also say with good certainty that the cost to generate a sale from acquiring new customers is higher than the cost of generating a sale from current customers. Why? Because you have already spent the initial investment to gain your current customer, and if retained properly, your investment to sell them again should be far less. As Jim Rohn once said, "One good customer, well taken care of, could be more valuable than $10,000 worth of advertising."

The 80/20 Rule
The 80/20 Rule has foundations in economics, and states that roughly 80 percent of your outcomes come from 20 percent of your inputs. Or in other words, 20 percent of your current customers account for 80 percent of your revenues. Although the rule was proven using statistical analysis by a man named Pareto, they are not hard rules set in concrete, and not every company will be like this. The ratio won't be exactly 80/20, but chances are if you look at it closely, you'll find striking similarities in your findings.

What does this mean for your business? Well, if it is true that 80 percent of your revenues come from 20 percent of your customers, then it would be wise to invest in finding out who that 20 percent is, and make it a priority to sell to them again. Your bottom line should see a nice bump each time these current customers repeat purchase. Here are four things you can do to keep your current customers coming back for more:

1) Develop a customer loyalty program.
Customer loyalty programs are a great way to gain repeat business. These loyalty programs can be as simple or complex as you like. A basic, yet very effective loyalty program rewards customers with some type of discount on future purchases, based on points they have accumulated from previous purchases. A word of caution: When developing such a program, make sure the rewards have reachable limits. I've seen rewards programs in a handful of stores backfire because the limits the customer needs to reach in order to receive the benefit are too high. The result was that the customer eventually became turned off by the rewards program, once they understood it was going to be virtually impossible to spend enough to receive any worthwhile benefit.

2) Consider running customer appreciation promotions.
Encourage your customers to buy again from you by offering only opportunities to shop at discount prices. To get this started you could offer a coupon discount on their next purchase, after they complete the first purchase. Including the discount information in an after order email is a great way to do this. You may also be able to leverage the frequency and timing of buying by offering sales to current customers that are valid only during certain time periods. Stores like Best Buy and Dick's Sporting Goods do a great job of this. They send out coupon mailers to current rewards program customers with a discount code that is valid between certain dates they specify. Some will even double the rewards points you earn on items purchased during those periods as well. It's easy to see that this type of approach shows how much the customer is appreciated. They are given double the benefit for choosing to buy from you again, and this gets customers excited.

3) Stay in frequent contact with current customers.
This can be done through email and even social media outlets. Keeping your brand in front of them is important for staying at the top of their mind and shopping list. Email is still an important aspect to keeping the communication lines open between you and your customers, even with the vast amount of email filtering software now available. To make this work for your business, you need to keep your list clean. This means only emailing those customers who specifically asked to be notified by email, and respecting their request if they ask not to be contacted again. Also, Facebook and Twitter are free and provide real time access to customers. They offer excellent opportunities for getting your message across, while at the same time helping prevent your message from accidentally being caught up in a spam filter.

4) Personalize the customer relationship and build rapport.
You've no doubt heard it takes time to build a good relationship, but only minutes to tear it down. When a customer has a good relationship with you, they are more likely to buy from you again. Oftentimes, developing that relationship is harder than it seems. For starters, make it easy for your customers to ask you questions and provide them with answers that help. Also, if you have asked for and been provided with their birthday, consider sending a personal birthday wish, along with a discount coupon especially for them (as your birthday gift.) These little touches really set the stage for ongoing loyal relationships.

Lifetime value increases by developing a retention program that nurtures the relationship between you and your customer. The secret is to keep your current customers happy, keep your brand in front of them, and give them no reason to shop anywhere else.

Eric Leuenberger is an ecommerce conversion marketing expert and author of a leading Ecommerce blog at He coaches store owners using his online coaching system,, teaching how to increase website sales using his proven six step process. Contact Eric at 1-866-602-2673.

Topic: Business Strategies

Related Articles: customer loyality 

Article ID: 1467

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