You will know you are running a successful business if you are having returning customers. That indicates you are providing the services adequately. With the repeat customer a business owner gets a steady cash flow. They also work as media to flourish your business with their referral. By providing a good service they will be your marketing as they will recommend your business to others. Even though it might seem simple to identify someone as a repeat customer, it depends on a variety of factors. Here we will discuss all there is to know about repeat customers.
Definition of a Repeat Customer
Generally a repeat customer is someone who has returned multiple times to take your service. It can also be when a customer engages with a business multiple times. But depending on various sectors the definition varies.
For a retail business when a customer returns to make another purchase then the customer is a repeat customer. But there is a timeline for it. As for subscription based services when a customer renews their subscription then that customer is a repeat customer. In case of service based businesses it is when a client takes service from the same business multiple times. So the frequency of the customer’s return is a key factor.
Importance of Repeat Customers
Better Revenue Stream
It’s better to get a loyal customer who keeps on coming back than acquiring a new customer. Moreover it’s cheaper to retain your old clientele than to get a new one. A repeat customer feels comfortable to explore more options and try out new products or services from the same business. As repeat customers build trust with the brand they will likely to spend more.
Brand Loyalty
If a customer returns to get the service of a business again, it indicates the customer is satisfied with the services provided. With continuous good services rendered a repeat customer turns into a loyal customer. This builds a long term relationship with clients and customers.
Reduces Marketing Costs
If you are constantly looking for new customers you have to spend a ton on marketing your brand. But with repeat customers you don’t have to market your services or product. They know the quality of your services and this will also result in referrals which will boost your business. This reduces the burden of marketing for any business.
Standards to Identify Repeat Customers
It might sound simple as counting the number of transactions. But to get the proper picture you have to go deeper than that.
Repeat Purchase Rate
This indicates the percentage of customers that have returned to make another purchase within a timeline. The formula for it is:
RPR = (Number of Repeat Customers/ Total Customers) X 100
Frequency of Purchase
This is another metric to identify a returning customer. This indicates how many times a customer has returned within a specific timeline. This is important for businesses like cafes and grocery stores.
Customer Lifetime Value
It is the measurement of how much a business will gain from the entire relationship with that particular customer. Repeat customers have higher value than average customers.
Tracking Repeat Customer
Technology has made it easy to monitor even the minor details of customers. With new software and AI it has become easy to track new customers. Businesses can track the habits of a customer and their behaviour through data analysis software. Tools like customer relationship management can track purchase history, frequency of engagement and preferred services or product of that particular customer. By using this data a business can understand the mindset of customers to make more loyal customers.
With a loyal customer base a business can thrive for longer. A repeat customer is a source of loyalty and potential long term income source. Properly understanding repeat customers can lead a business to success. Moreover a business will learn to retain customers and create loyalty among its customers and clients.