Understanding your customer base, its drivers and motivations is key to growing revenue.
Everyone knows that for almost all businesses, it’s cheaper to get repeat custom than find new customers.
Despite this, many companies spend very little time getting to know and understand their customer base. They often also happen to be companies that are looking for accelerated growth but aren’t sure how to get there.
Customer loyalty is key
To effectively manage your client base you’re going to have to get familiar with the facts. This is how the fastest growing companies operate.
Below is a simple chart that explains the percentage chance of repeat business from existing customers.
• After the first purchase, there is a 50% chance that the customer/client will buy from you again
• By the second purchase, this probability has increased to 70%
• With the third purchase, the percentage now averages around 85%
• Beyond the fourth purchase, the chances of repeat business increase to 95%
These statistics in themselves may not change your business, they may not even be news to you. What is of importance however, is what is done with them.
Ask yourself “What does your business do to make sure a new client buys from you again?”
Addressing this question and creating strategies and techniques to create a value proposition for the customer/client will encourage them to come back and purchase a second time.
Keep it simple
To understand what this can do for your bottom line, run through the following process:
1. How many customers/clients did you have in the last year?
2. How many of these were new clients?
3. How many of these new clients are likely to turn into repeat business?
4. If you could turn 20% of those new clients from last year into repeat customers, how much extra revenue would that deliver to your business from the second purchase?
5. Given that there is a 70% chance that after the second purchase, these customers would buy a third time, how much extra revenue would that deliver to you?
You can quickly see how understanding customer loyalty can unlock huge revenue growth. The trick is, to know what strategies and techniques you can employ to create a value proposition strong enough to do this.
If you’re interested in finding out how to implement this within your organisation, get in touch with one of our team who will be happy to demonstrate our learning management system. You will also have the opportunity to see our many other business growth strategies which are available to Powered by Shirlaws licensees.
Alternatively you may wish to engage a Shirlaws Coach to guide you through your learning curve. You can read their profiles here.