Retailing: From A to Z

TIPS FOR BETTER RETAILING: “The Importance of Repeat Customers”

by Joel R. Evans and Barry Berman

 
Too many retailers concentrate on how to woo new customers and, thus, they do not pay enough attention to what they can do to gain the loyalty and increased patronage of their repeat customers. For example, when was the last time that YOU ran a special sale just for current customers, communicated with your current customers via a phone call or direct mail piece, encouraged current customers to recommend new ones by giving the former a gift for doing so, sent birthday, anniversary, or holiday cards to current customers, offered extended shopping hours just for current customers, etc.? Unless you are actively engaged in all or most of these activities, you can do a better job in this area.

Why It Is So Important to Target Current Customers, as Well as New Ones

• It is more efficient to serve repeat customers than to heavily promote to lure new ones.

• Often, new customers are lured because of a special sale, buy goods that have a low markup to the retailer, and then switch to another store when it runs a sale event. Repeat customers are more apt to buy a full range of merchandise, not merely discounted items. This means that the retailer can reach its profit margin goals.

• Loyal, ongoing customers are the backbone of every business. And in today’s highly competitive environment, these shoppers cannot be ignored or else they may be won over by the competition.

• Revenues can be increased (not just maintained) by placing greater attention on repeat customers. These people can be encouraged to shop more often and to purchase more on each trip to the store.

Hints for Targeting Current Customers Better

• Develop a database with the appropriate customer information. This could be done by giving your shoppers a small prize for filling out a short form and then updating the information periodically. Computerization is not necessary to do this, although it helps.

• Set up some type of frequent-shopper program that can reward people for their continued patronage. The program does not have to be complex. For instance, many car washes give out punch cards (or a similar variation) whereby customers can earn free services based upon a certain number of washes.

• Communicate with these customers on a regular basis. Mail (E-mail) them a letter at least quarterly. Call them at least once per year. Customers are often quite impressed when they receive “friendship” rather than “sales pitch” letters and calls. People like to feel appreciated.

• Run special events for good customers. This also lets them know how important they are to the firm.

• Offer extra services, such as free delivery or more liberal re turn policies, for good customers.

• Do not reward your new customers at the expense of the current ones. Think carefully about having promotions that offer benefits to new customers that are not available to current ones, such as reduced credit terms for first-time car buyers. Try to run promotions in a way that also offers benefits to current customers, such as also having special trade-in terms for people who have bought their previous car from the same dealer.