Customer acquisition is a very popular marketing and sales growth strategy among e-commerce merchants and business owners in general. They are of the school of thought that new customers can bring them the kind of sales target they want to hit.
In reality, it is a different ball game trying to improve sales by acquiring new customers. This is not to say acquiring new customers is inadequate and not needed. The gist is that there is more value to gain from returning customers.
On average, a retail store might gain about a 60% rise in new customer acquisition, and having all the necessary strategies in place alongside good customer service, the retail store can have 81% of these new customers retained to make another purchase.
If this is the case, a first-time buyer in your store has a lower chance of spending more. And this is due to the fact that the customer might be testing the waters since it is their first time.
First-time buyers are usually skeptical about the kind of experience they would have with a seller, so they might want to tip-toe with the first purchase. This is more reason why you have new customers spending less compared to what a returning customer would spend.
A returning customer shows loyalty. The fact that they are coming back to buy again explains how much they enjoy buying from your store. And at this stage, the customer has the potential to spend more than they did in their last purchase as you have built trust and loyalty with the buyer.
What You Need To Grow Sales As A Store Owner
You have a better and high chance to convert a returning or existing customer as a retailer compared to how much you need to spend when trying to retain new customers.
Retaining new customers costs more compared to the marketing costs required to keep existing customers with you. We can say new customer acquisition is not cost-effective.
Although, it is sufficient to say you need to gain as many new customers as you can to increase sales. Coupled with the fact that you need to increase your customer base by acquiring new customers. However, what you get when you invest more effort into converting new customers to returning customers who have a better chance at making them spend more is far better than new customer acquisition.
Since your goal is to increase sales and revenue for your store. I’d bet that you improve your marketing cost by retaining more customers than just acquiring new ones. Hence, we will be discussing key strategies to help you maximize existing customers and get them to spend more.
New Customer Vs Returning Customer
The level of trust you can get from a new customer is relatively low. All they know about your store is probably what they read from the review page or from customers who have patronized your store before.
An existing customer who is returning to buy has grown their trust in your service from past shopping experiences. This kind of customer will not draw back to spend more or trust you with their orders.
Familiarity with the store and order procedure is another factor to consider about these categories of buyers. Returning buyer understands the order procedure and details since they’ve had first-hand experience.
Although a reasonable number of new customers can bring you the sales and profit you desire. Existing customers are said to be the source of stable income for businesses as you can rely on them to at least make a purchase within a sales period. Compared to new customers who can have a one-time purchase.
How To Convert New Customers Into Returning Customers
1. Retargeting ads
Usually when acquiring new customers, you might engage a marketing strategy like social media promotions to drive traffic to your store. This traffic ends up converted into sales.
After gaining customers from this channel, you can outline other strategies to retarget such customers after their first purchase. This will help you drive a new customer into making a second and subsequent purchase.
Retargeting ads simply help you reach put customers in this kind of scenario. Although, you might incur some marketing costs retargeting ads do not require as much as you would need to convert a visitor to sales.
That is why, returning customers cost less to engage in terms of marketing. If what you are looking for is a stable source of profit for your store, you sure want to improve customer lifetime value on your store to keep revenue stable.
2. Post-Purchase Customer Engagement And Experience
Marketing and customer experience do not end after you get what you want (sales) from a first-time buyer. Customer retention requires that you engage your customer more even after their first purchase.
There is a likelihood that a customer who receives your emails or gets constant contact from you can be moved to make the next purchase. Practically, you can encourage your customers to make a purchase decision to buy if you stay in touch after their previous purchase.
Let’s see some of the ways you can improve customer service post-purchase
– Special messages on birthdays: You can look to capture customers’ birthdays on the thank you page after payments have been made for their first purchase. This will help you keep a close call with such customers. You can either offer them a discount to be redeemed on their birthday or send them a heartwarming birthday message.
Capture customer birthdays on the thank you page with StoreBundle
– Personalized emails on next sales event or discount: You can engage customers with email marketing by attaching detail of the next sales season or the discount for an item the customer has shown interest in during their last visit to your store
3. Upsells and Cross-sells
Remember I mentioned that acquiring new customers cost more than getting your existing customers to spend more. To maximize what you get from existing customers you can upsell and cross-sell at every sales funnel point to nudge customers to buy more.
Both marketing technique is to make your customers buy and spend more. You can attract customers with product upsell on your thank you page, cart page, or homepage.
According to an e-commerce stat, upsell is said to increase sales by 10-30% on average, and for most businesses, 85% or more of their revenue comes from recommended products.
So it is more cost-effective to upsell to an existing customer than to acquire a new one. An existing customer has reached a level of trust buying from you compared to a new customer with no idea what your service is like.