Imagine these 2 situations
You stop by a shoe shop on the way home from work. The shop assistant smiles, says good evening and asks you what you are looking for. You browse the shelves, try 2‑3 pairs and buy one of them. He asks you if he can help you with something else. There is nothing on your mind, you pay for your shoes, and go on your way.
You stop by a shoe shop on the way home from work. The shop assistant greets you by name, in fact he immediately starts showing you the available shoes in your size only. You try 2‑3 pairs and since you are regular, he shows you 3 additional pairs you might like from the new collection. You thank him and while paying for your new shoes he recommends using shoe protection spray for the current weather. He also mentions he can send you an email or SMS when other pairs will be discounted, if you’re interested.
There is nothing wrong with the first situation. You paid for what you expected and got exactly what you required. Everything worked fine and without any problems. Even the result of the purchase is the same, but the second experience feels somehow… better.
On top of that, you are much more likely to keep coming to that shop to fix your new “shoe situation”, aren’t you? Or, even buy the promised discounted shoes that you have already tried on.
Did you know that Harvard Business School found that increasing customer retention by as little as 5% can increase profits between 25‑95%? What the average retail companies might not realize, is how much of a missed opportunity that is.
To be in a position to focus on your most valuable customers might sound like a luxury. After all, various businesses are thankful for customers of any kind.
The likelihood of selling to an existing customer is 60‑70 percent. For new prospects, it’s just 5‑20 percent.
Repeat customers spend 33 percent more than new customers.
Depending on your industry, the cost of acquiring a new customer is anywhere between 5 to 25 times more expensive than retaining a current customer.
But every e‑commerce company is aware that some customers are more valuable than others. There is a variety of reasons for this, from the size of their purchases to loyal brand ambassadors not just purchasing regularly, but also spreading the word.