Rewarding Loyal Customers is Cheaper than Attracting New Ones
When a business is looking to sell more and increase their profits, they often turn their mind towards how to generate new business: new subscribers, new gym members, new clients, etc.
It makes sense – new money comes from new customers, right?
Well, not necessarily. In fact, you’ll often find that your best profits come from those customers or clients who’ve done business with you time and time again.
In this article, I’ll be discussing why repeat customers are so beneficial to businesses, why they deserve to be rewarded, and how travel and experiential incentives are some of the best ways to reward them.
The Benefits of Repeat Customers
It’s logical to assume that, most of the time, having a repeat customer or client means your business must be doing something right. Most people aren’t going to return to a place of business where they had a bad experience.
Perhaps it’s the quality of your services, the value of your products, a mixture of both, or even something that you may not consider as often (e.g. the atmosphere and ambience of your business).
Consider, for example, your local café or diner. You’ll often find that they’ll have their regulars who come in each day, almost without fail, to enjoy a coffee, tea, snack, or meal. It’s these regulars who can provide a sense of stability for companies, just like retainer clients do for B2B companies.
But did you know that, on average, repeat customers spend 300% more than new customers? That is a significant leap in purchasing value, no matter which way you cut it. That a repeat customer is more likely to pay $30 for every $10 a new customer spends just goes to illustrate how and why repeat customers are so important to any business – no matter what your business specializes in.
Also, keep this finding from Harvard Business School in mind: increasing customer retention rates by 5% increases profits by 25% to 95%. There are huge gains that come with being able to keep customers around, which is why focusing on current customers often proves more cost effective. You’ll experience a solid return on investment.
Bigger spending is just one of the many benefits that repeat customers bring. Don’t forget that they also become unofficial brand ambassadors. They’ll tell friends, family, and colleagues about your business freely because they have a genuine belief in what you do and the way in which you deliver your products and services.
Word-of-mouth marketing is massive, and this applies both in face-to-face recommendations and those made online through reviews, location tagging, and even when they post about you – just think of how significant it can be when any customer posts a photo of your business on a platform such as Instagram.
A study by Ogilvy and Google found that 74% of buyers make purchasing decisions based on recommendations from friends, family, and/or trusted colleagues. So, no matter which way you cut it, loyal customers are essential to any business's success. Failing to account for them will only serve to hurt your profits and image.
Why You Should Be Rewarding Repeat Customers
Repeat customer rewards are nothing new, but they can be overlooked by businesses. As is evident from the above section, repeat customers are often the ones who deserve rewards from your business the most.
Such rewards come in a variety of flavors, from the small perks (e.g. every 10th coffee at the local coffee shop is free) to larger rewards – cash prizes, high-value gift cards, experiential rewards, etc.
What matters most is that you do reward them. Loyalty and repeat business deserve gratitude, so make sure you’re doing something to accommodate for your most loyal customers in a way that makes them know they’re appreciated.
Experiential Incentives: The Perfect Way to Reward Repeat Customers
Given the immense benefits that repeat business brings, finding the right way to reward loyal customers is essential. One great reward type is what is known as an experiential reward.
Experiential rewards, as the name suggests, are all about providing people with unforgettable experiences rather than just things. Instead of rewarding someone with a gift card, you’d reward them with a vacation, a cruise, tickets to a much-loved event, etc.
Such rewards are an opportunity for individuals to go out and experience things they’ve potentially never been exposed to before and, as a result, build unforgettable memories that can last a lifetime. Being the company that enables your repeat customers to have such experiences will further develop and solidify your relationship with them.
As just one example, a property management client, Morgan Properties, utilized travel incentives for a variety of applications, including as appreciation rewards for long-term tenants – an effort that was met with plenty of positive feedback. In another instance, tenants who renewed their leases within a set time frame received travel certificates that granted them a trip for two to Las Vegas.
These rewards, having been aimed at current tenants, allowed them to both secure more renewals and build even better relationships with those tenants who’d been with them for years. The expense of investing in these incentives was comparatively minor when stacked up against the profits generated from the long-term tenants they were rewarding.
It’s these actions, and the associated experiential rewards, that can have a notable and positive influence on your business’s relationship with repeat customers – and the stronger these relationships become, the greater the likelihood that your repeat customers will remain repeat customers for the foreseeable future.
Every single customer your business has is important; but, in your efforts to bring in new customers, don’t forget to reward and thank the fantastic loyal customers you already have – they’re the customers who helped make your business a success, and they’re the ones who will help maintain its success. Give them a reward that stands out and offers a unique, fulfilling experience. If you want to know more about travel incentives and the unforgettable experiences they offer, get in touch with PCR today. [link]