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When is a customer not a customer?

16th Jun 2022
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If a customer doesn’t repeat purchase then they're not really your customer and they belong to someone else.

Imagine a world where the definition of a customer was someone who buy’s a company’s goods or services more than once. In fact don’t imagine it, apply this definition to your business now and see what effect it has.

We regularly talk to companies where more than half of their customers wouldn’t be counted under this definition because they have only bought once. Half of the customers they think they have would not be included in their customer metrics.

I’m a great believer in playing with data and this is one exercise that I urge you to try. Rerun all your customer numbers using this revised definition of a customer. The numbers when it comes to things like retention rates, customer engagement rates, spend per customer etc will be truly enlightening.

The simple truth is that a one-off customer is not really your customer – they belong to one of your competitors. Including these customers in your metrics is a false comfort blanket that is hiding the true picture of where your business is. You should really view a one-off customer as still being a prospect. You’ve worked really hard to get them to the first purchase and no doubt spent a lot of money too – but the job is far from complete.

Getting new customers to a second purchase is extremely difficult. the majority of customers will never purchase a second time. But encouraging repeat customers creates long-lasting, profitable relationships. Not only are your repeat customers purchasing more over time than new customers, they spend more per visit and tend to purchase more expensive products or services.

While only a minority of first purchasers will make a second purchase, the majority of customers that make a second purchase will make a third. And with each successive purchase, the likelihood of them coming back increases. Acquiring new customers is great but getting them to buy the second time is even better. A second purchase is a key step towards becoming a high-value customer. What’s more, it is significantly cheaper to get existing customers to buy twice than finding new customers altogether. 

You need to start building a relationship from the very beginning of a customer’s journey with your company, engaging them with relevant information at each stage. You want to actively move prospects through the funnel until the point where they become repeat buyers. A key cornerstone of this activity should be some form of nurture programme. A nurture programme is a series of triggered communication timed around an average frequency of purchase for an industry sector. The communications may include offers and incentives. It should include recommendations on next products to purchase. This could be based on best selling products or it could be based on affinity models - a set of models that predict the most suitable next product to buy.

Whatever is in your nurture programme it is important it is measured correctly. Don't just measure it on how many sales have been made, you need to measure how many customers have made a second purchase.

If you’d like to talk about repeat purchase marketing, we'd love to hear from you! Please visit our site at https://www.relevanz.co.uk/touch and let us know how we can help!

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