July 14th, 2015
First Time, Repeat or Loyal Customer?
The Merriam-Webster Dictionary defines the word “customer” as “one who buys the goods and services of a business” and “an individual with whom one must deal.” “Loyalty” is defined as “faithfulness to obligations and to a person or thing deserving fidelity.”
Without the customer, there is no business. The customer provides a business with the money for all of its employees’ salaries, facilities, equipment, materials, advertising and the owner’s profit. Much time and effort is spent to get customers to purchase the first time.
A business invests all its initial marketing resources to offer its products and services to prospective customers. It pays for marketing to find prospects and mobilizes a sales force to convert prospects into sales. The end result of all that work and effort is a “First-Time Customer.”
When all goes well, the first-time customer returns to buy again. At that point, they have moved up the food chain and become a “Repeat Customer.” For the biggest return on that initial investment, effort should be made to keep customers returning to buy more in the hopes they will ultimately become a loyal customer.
When each sale is a first-time purchase by a new customer, the marketing and sales effort required to find new customers increases the cost of overhead exponentially.
The repeat customer purchases again after that initial effort, giving you a chance to earn their loyalty… The loyal customer continues to purchase long after the marketing department and sales force have each done their individual jobs of finding and converting prospects the first time. Without faithful, loyal customers, the company is forced to find new first-time customers or convert a first-time customer into a repeat customer each time it needs more revenue.
The loyal customers give us so much more than lower cost revenue. They can give us good information about ourselves… The loyal customers may even overlook a shortcoming in favor of the relationship built – on occasion.
Find out more in my next article…