How to keep Existing Customers Happy and Buying More from You

1. Introduction

It is not a secret that it is much harder and more expensive to acquire new customers than it is to retain existing ones. Retaining customers is not a passive thing and many businesses fail to do it right or even do it at all. To prevent decline in their business, companies often increase efforts and spending on customer acquisition strategies. Such increases are often connected with increased cost for the additional volume. This tends to become less and less effective the more you do it. It can create a vicious cycle that leads to the failure of the business when expenses reach a point that profits get reduced to nothing and turn into losses.

The losses will take away from the business's substance and equity until it is too late to change course. Instead, spend more time and money on retaining existing customers and leverage the relationship that was build over time to increase their spending with you instead of somebody else. This strategy is much more profitable. Doing a good job with that also impacts indirectly your customer acquisition efforts in a positive way; because happy long term customers of yours are more likely to recommend you to their friends and colleagues.

2. Customer Service

It is only possible to retain a customer who is a happy customer or a customer how has no other choice (which is one of the reasons why a monopoly is a bad thing for everybody, but the company who has it). Forget about the customers that are impossible to make happy. They are in a minority and their number is insignificant. If you think that this figure is much higher than it should be, take a closer look at your marketing and advertising campaigns and what sales is doing. Customer expectations that are too high to meet are most likely the result of false promises made during the conversion process.

While presenting one's product and company in a good light is understandable and not a problem, exaggerations of key elements of your product or service that are critical to your customers should be avoided. You might get the initial sale, but will probably lose the customer afterwards. If you did all of this wrong, good customer service will not help you make a customer happy again to retain him. Good customer service can only do that in cases where something is not clear to the customer and requires explanation or clarification. Nothing is 100% perfect all the time and errors or misunderstandings happen. It is not the end of the world and can usually be fixed easily without letting it escalate.

It is critical to resolve these issues quickly. The customer should not have to go through a complicated and lengthy process. Doing a good job here will turn an upset customer into a loyal customer and even an evangelist for your company and product/services.

3. Usability of the Site

Make it easy for new customers to find their way through your web site and convert* (*see comments below). At the same time keep in mind existing customers who have already purchased and know their way around on your site. Keep it easy for them to get what they want quickly.

3a. Customer Profiles
Allow users to create a profile to store address and billing information. This sounds obvious in this day and age, but there are still plenty of sites that do not provide this capability. Allow customers to store multiple shipping addresses in their profile. It is not unusual for people to alternate using their home and work address depending on what they order. Also keep in mind people buy gifts for friends, family and business partners or customers (B2B). This is not limited to Christmas, but also other occasions, like birthdays and anniversaries.

3b. Expedited Checkout Process
A multi-step checkout process that is simple and easy for a new customer to follow is great but can be annoying for returning customers when you already have the information required for the order. Even if you pre-fill every page the customer has to go through them to place the order. Show one page with the existing and default data from previous purchases or defaults that the customer might specify.  Provide links from there to sub-pages to change individual parts of the order, such as shipping address, billing information, and payment method or gift options. Shipping method and coupons should be editable on the page. This will allow the customer to complete an order in a single step, if the defaults can be used for the current order.

3c. Save for Later/Wish Lists/Gift and Wedding Registries
People don't always buy something immediately, even if they are interested in the product. Make it easy for them to save it and come back to complete the purchase. Let people create wish lists and even gift registries, like wedding registries, if your products or services can be sold as a gift. You will not only get more business from the customer, but also have the potential to acquire new customers.

How is that?
If you allow customers to create the lists and also provide an easy to use means so they can let other people know about the lists, then it is much more likely that people will use those features. The people who receive the notifications might be already a customer of yours, but some of them are probably not (yet).

4. Offers

If you only offer promotions to new customers and never reward existing customers, chances are they will get upset or they will start to create multiple accounts in order to get the deals. Don't let that happen! You either lose customers or clutter your customer database with numerous, duplicate profiles. This will increase the difficulty of creating and maintaining good customer profiles and at the same time decrease customer loyalty. You risk losing customers to your competitor who understands this and appreciates customer loyalty by providing incentives for repeat and long term customers.

5. Communication

Stay in touch with your customers and communicate with them on a frequent basis. It is not easy to determine the optimum frequency for contacting your customers. You should contact them often enough that they do not forget about you, but not too frequently so they start ignoring your messages or, even worse, consider them spam and mark them as such.

This is a science by itself and requires ongoing testing and analysis of KPI (key performance indicators), such as deliver-ability rate, open rate, response rate, conversion rate and unsubscribe rate. After the frequency of contact, the content of the message is next in importance. Not every customer has the same needs or interest. The "one message fits them all" approach is not only less effective but converts poorly. It also increases opt-outs and "filtering out" of the messages (e.g. recipient flags message as spam).  

Making a message personal for every customer is not easy, although it is the ultimate goal, but you can at least make customers feel as if the message is personal for them. The easiest thing to do is to address them with their name rather than using a salutation like "Hello Customer." The segmentation can be done based on a number of criteria and will depend on what you offer and factors like the types of customers, their interests, or financial status. A single customer can be assigned to multiple segments that overlap and serve different purposes.

There are numbers of methods you can use to contact your customers. While a phone call or snail mail can be appropriate and useful so is email still the most common and cost effective way of communication between e-tailers (online retailers) and their customers.

There are tons of services out there that can help you manage your email lists, segment your customers and keep the list clean and up to date. The costs vary significantly and depend on various factors such as:

- The number and type of features that you need/want from the service
- Which and how much work you want the service providers do for you
- What you can and cannot do/not want do in-house and outsource instead
- The size of your mailing list and the frequency of mailings (total email volume)

6. Conclusion

These are only some of the things that you can do as a business to improve retention of your existing customers and at the same time increase the probability that they spend more money with you. The changes are typically small and low cost in comparison to the return. Also keep in mind that the increase in retention and amount of business that you get from an average customer affects all customers that you already have.  It should be significantly larger than the business that you would get from a few new customers that you acquired.