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How to understand why your customers buy from you and build customer loyalty

Whether you run your business from home, online, or out of a commercial office, your customers are vital to your success.

Loyal customers are those that come back to purchase from your business again. Not only can they help you increase your profits, they also often generate positive word of mouth, which can be an effective marketing tool. Generating and keeping loyal customers is a priority for any business, but particularly if you're looking to grow.

Benefits of keeping loyal customers can include:

  • increased sales
  • increased profits
  • increased word of mouth and referral business 
  • reduced costs in attracting new customers
  • building good relationships with your customers.

Here are some ways to help you attract and keep loyal customers.

Understand why your customers buy from you

Understanding why your customers buy from you is one of the most important elements of your business model. For example, is it your customer service, your convenient location or your low prices that make your customers want to buy from you again? You can try asking some of your best customers why they choose to buy from you, to help you improve on these features. This valuable feedback can help if you're looking to innovate in your business, open a new location or even if you're just trying to improve and refine your business model!

Find out more about business innovation and conducting market research in our business topics.

After-sales follow up

After-sales follow up means contacting your customer after they've bought a product or service from your business. Contacting your customers after the sale can help you build an ongoing relationship with them, and also encourage them to talk about your business in a positive way. When contacting them, try asking if they're happy with their purchase. If they're not, you could ask them how your product or service could be improved.

You can also use this opportunity to let your customers know about any incentives for repeat purchases, loyalty discounts, gift cards or upcoming sales you might have. You can also offer product demonstrations, complementary products or any special promotional offerings. Most customers appreciate being 'in the know' and this can help generate a feeling of community. Make sure you are aware of spam and telemarketing laws if you are phoning or emailing your customers.

Incentives for repeat purchases

Giving your customers a 'reward' for returning to your business can be an effective way of encouraging your customers to stay loyal to your business. This is also known as a 'repeat purchase' system. For example, if you run a café, you could offer a loyalty card that's stamped every time someone buys a coffee from you. The 10th coffee could be worth a free drink, an upsize or a discount. This kind of system can encourage repeat purchases, help you keep loyal customers and generate word of mouth for your business.

Customer service

It is important to understand what customer service is and why taking the time to improve it can be beneficial to your business.

Even though it may take extra time, effort and consideration, providing excellent customer service is a great way to turn 'sometimes' customers into 'all the time' customers. Excellent customer service is about treating your customers with respect, considering their needs and wants, knowing your product and going 'above and beyond' to help them.

For example, if you run a café, you could instruct your wait-staff to provide customers with other options for dietary requirements or offer refunds if customers are unsatisfied with their meal. Taking the time to follow up on all the feedback you receive is another great way to improve your customer service. Your customers will appreciate it if they can see you have acted on their feedback, or addressed it in some way. Get inspired!

Find out more about how you can provide good customer service.

A unique experience

Creating a unique experience can be another way to attract and keep loyal customers. This is also known as a unique selling proposition (USP). Your USP can set you apart from your competitors, make your business memorable or solve a gap in the market. Your USP is also an important aspect of your brand and positioning. If your business offers an experience that no one else does, your customers are likely to come back to experience it again. For example, if your café offers free jazz music on a Sunday afternoon, customers will have a reason to choose your café over the one down the road that doesn't offer live music. Your business' unique experience could come from customer feedback, a bright idea on your behalf, or a response to a gap in your industry. Whatever unique experience your business offers, it can help to strengthen your brand and generate loyal customers.

Business innovation

Another way of generating a unique experience or a USP is through business innovation. Generally, innovation means changing the way things are done. In business, it can mean changing your business model, creating more efficient processes, selling a different product or just being more creative. Innovation doesn't always mean inventing something new—it can be much more organic than that. For example, a staff member might suggest a new way of promoting your business which in turn could lead to more customers. When implemented successfully, innovation can help your business grow.

Innovation can also:

  • improve your business model
  • drive sales
  • increase customer satisfaction
  • help you have more efficient internal processes.

Making sure a culture of innovation is built into your business model is important to building your business. Asking yourself tough questions, listening to your staff's insights, implementing customer feedback where appropriate and responding to changes in the market are all examples of business innovation.

This content was first published on www.business.gov.au

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