keep customers coming back

How to Keep Your Customers Coming Back

So we’re on step 4 this week of reviewing the 5 Steps to Increased Profits framework – focusing on one of the five steps each week.  As a review, the five key profit-generating metrics are: Lead Generation, Conversion Rate, Average Dollar Sale, Number of Transactions, and Profit Margins.

I’ve highlighted the five keys in the following equation:

Lead Generation
Conversion Rate
# Customers
Avg. Dollar Sale
Avg. # Transactions
Profit Margins

I talked last post about the importance of ensuring you boost your Average Dollar value of each sale.  This week we focus on increasing Number of Transactions by looking at how to keep customers coming back.  Many businesses think that once they have a new customer, the work is over, but in fact the work has only just begun!

When a prospect buys from you for the first time, they step on to the first rung of what we call the “ladder of loyalty” and become a shopper. Then when they buy again they take the next step and become a customer, and so on up the ladder, as can be seen in the following diagram.  The framework to keep customers coming back and generating Repeat Business, is to increase lifetime value by using the 7 rungs of the Ladder of Loyalty:


On the lower levels of the ladder, there is very little customer loyalty and if a competitor comes along with a better price, customers are more than likely to give them a try, and you may never see that customer again.   The art of achieving a high level of customer loyalty is to move them further up the ladder, so that they become loyal clients and eventually raving fans.  Once they become a raving fan, not only can you guarantee they will always buy from you, but they will go a stage further and start actively recommending other people to come to you, so helping to fill your sales pipeline.

So how do you turn your customers into raving fans? Well, the first stage is to know who your customers are and categorize them based on how much they spend with you and how much of your time they take up. I use an ABCD system:

A = Awesome

B = Basically sound

C = Could do better

D = Don’t want to deal with

There is little point in spending time and effort with your D clients. These are the ones that haggle over price, take up your time over pointless queries and spend so little with you compared to the effort you put in that if you checked, you’d probably find that they bring you no profit at all. So just pass them on to one of your competitors; you never know, they might become their awesome clients!

C clients are those that have not yet been educated in how you like to do businesses. They have some of D’s habits, but buy sufficiently from you that they are worth trying to upgrade.

B’s are the clients who form the bread and butter of your business. Some you will be able to upgrade but others will need more attention and appreciation to maintain their loyalty

A’s are your advocates and raving fans. These guys make what you do enjoyable. They not only buy from you but they can’t wait to tell others about you.

So what do you do to upgrade and maintain your clients at the appropriate level? Well, the answer is simple. You keep in contact with them and create a loyalty program.  There are many ways that you can keep in contact with your customers, and technology has made this far easier than ever before.   Through email, blogging and social media, you can remain in contact with your customers as regularly as you like for the minimum of investment.

The more traditional method of keeping in touch with your customers include telephone calls, newsletters, direct mail and entertaining. Whichever method you use, you must bear in mind the appropriateness of the medium and its effectiveness and importantly, make sure that you give value to the customer.

The easiest method to set up and systemized is the quarterly newsletter or email. Some people dislike newsletters because they are full of dull boring information about the company, which is of no benefit to them. So the best way to appeal to people is to be more creative and have some fun with it and provide high value content. People like to be informed of interesting things, learn something new and have fun. With some thought and creativity, you can make receiving your newsletter a highlight of your customers’ quarter.

Loyalty schemes there are some very simple schemes you can use that will have just as much effect as the big airlines programs. All you have to do is monitor the level of business a client does and then reward them when they hit certain targets. You can do this via databases, accounts systems or plain and simple printed cards.  Rewards need not be money off; in fact you can get really creative with this – all you have to do is give perceived value.

One great strategy is to find a non competing business in the same sector and offer each other’s clients something from your range, e.g. a photographer and a florist could swap a bouquet for a portrait. Remember that this will have the added advantage of putting a new person onto each other’s loyalty ladder.

Another great way to reward loyalty is to invite clients to a special event, such as an educational seminar, a new season products launch or even arrange a celebrity visit.

Whatever you do to keep your clients coming back and stepping up the ladder, make it interesting, add value to your clients’ lives, have some FUN, but above all, TAKE ACTION.