Rely on Trust for Repeat Business Growth
The business value gained from repeat customers is twofold.
First, repeat customers have a great economic value. They require less marketing and conversion effort, have a reduced need for orientation and training, and may provide predictable buying patterns, for example monthly, annually or seasonally.
Second, they can help you formulate the picture of your ideal customer. These customers appreciate the value your business delivers. They probably tell others about your business and represent the bottom of your Marketing Hourglass. Understanding why they return to your business helps you connect with others just like them.
Increasing repeat business is reportedly easy. Just ask any of the experts that create the shortcut and quick-fix articles on how to retain your customers and they’ll give you the exact formula. Creating positive experiences, ensuring value are achieved, and building trust is all essential for repeat business. But one of the fundamental elements ignored in many of these articles is the step of determining which customers are likely to offer repeat business opportunities and which do not.
Determining if the customer is transactional or relational is key to knowing where to invest your time.
Transactional customers are more likely to base their initial and repeat purchase decision based on one characteristic: price. They seek to fulfill their need or want by selecting the most inexpensive alternative. Maintaining a relationship with these types of customers is easy. All that you need to do is ensure your product or service is the lowest priced in the market. If your business model is built on volume or low-cost delivery, these types of customers may be your best opportunity for repeat business. Marketing to them is somewhat easy. Keep your low price alternative in front of them, so you are top-of-mind and considered when they price shop their next purchase.
There are obviously many disadvantages to this model. “Someone is always willing to sell cheaper” is the one that initially comes to mind.
Relational customers are not driven by price alone. They may have many considerations in the buying decision, but the price is not the primary one. Relational customers rely on trust and positive experiences with your business to make their repeat purchase decision. They appreciate the comfort and confidence of knowing your business can solve their problem or fulfill their needs without having to go through the evaluation of vendors and decision-making process. They want an ongoing relationship with your business.
These customers are also more likely to refer your business to others that are just like them. Their referrals have a multiplying effect on the relationship building effort.
In evaluating these two types of customers, it should be clear where you should be investing your time to get repeat business. If your business model is volume based or requires little cost to deliver spending time to attract customers solely on price may work best for your business. But if your business thrives when it has loyal and devoted fans, spending the time to create trust will allow you to retain these customers and earn referrals to others.
Want information on how to build your business using positive experiences and establishing trust? Download this eBook that outlines a 7-step progression successful businesses use to achieve growth.