Put It On Repeat!
There has been a lot of research in to the profitability of repeat business. It is said that customers who return to make another order are, on average, worth 5 times more profit than an order from a new customer. This is because it will generally cost you nothing to get an existing customer to make another purchase, but always attracting new customers costs you money in advertising and promotions, as well as time. If your business has a low rate of returning customers, it can struggle to stay afloat, because you constantly need to keep finding new customers in order to turn a profit.
By creating a sense of loyalty in your customers, you can solve this problem. A loyal customer will not only return to buy from you often, they will also spread a good reputation about your business through positive word-of-mouth, bringing in even more sales.
My promotional t-shirt printing business targets Australian rock bands, who in my opinion are the second biggest networkers (after mothers!). They share everything with each other, because bands like to help other bands. I once had a situation where an order for 100 printed tees was late, so I quickly organized an employee to jump on a plane and fly the package out to my customer in the next city. Yes, it cost me more than the profit I made - but I made my customer’s day! They had a very important gig that night.
As well as helping these guys out because it was the right thing to do, it was also important for me to consider the lifetime value of the customer. The real cost at stake here, had I lost their business, was not only the purchases that they will make in the future (currently about 2 per year, growing consecutively)
but also the damage that could have been caused to my brand’s reputation. A poor reputation can mean a rapid decline in sales and even has the potential to destroy your business.
Your customers are invaluable - treat them like rock stars. This one truth has the power to turn your business into a thriving multi-million dollar company - a customer-focused company.
June 21st, 2008 at 10:57 am
Spot on Heath. People leave restaurants, cancel hosting accounts, change dentists every day - all because of bad service. If you think about it, these businesses are losing quite a lot of money by annoying you or not keeping you happy. They are losing ALL the profit that they would have made from you over the entire life of their business which can amount to a huge stack of cash in many cases.
June 21st, 2008 at 11:03 am
Repeat biz is what keeps food on my table. I do my best to keep my clients happy and they return the favor by coming to me every time they want to do business.
You can’t expect to grow if you don’t treat your customers well.
June 22nd, 2008 at 5:24 am
When I first started out with my Graphic Design business - I had no problem gaining new clients but it wasn’t until I stopped trying to attract new business and started working on relationships with my customer-base that I started to really see some profit.
It costs too much to have customers come in one door and walk out the other. You need to build a relationship and make sure that they use you again for their next job. This will boost sales like crazy and your clients will be much more inclined to refer their friends to you.
August 1st, 2008 at 9:18 pm
Bad news can travel fast - your action was worth it’s weight in gold.
Had a wedding situation similar about 6 months ago. Didn’t have to hop on a plane, but did have to do a quick motorway drive.
All the best,
John