Getting the most out of your existing customers is one of the best ways to increase sales without investing a boatload on marketing and advertising promotions. Various studies show that getting current customers to repurchase is up to 5x cheaper than acquiring new customers for your business. You can get five customers to buy more from you for the same amount instead of getting one new customer. If each customer spends 1,000 pesos on your brand, you’ll make 5,000 from your existing customers instead of 1,000 from a new customer. Imagine how much more you can earn if you scale it to 1000 repeat customers vs. 200 new customers.
Increasing Customer Lifetime Value
Customer Lifetime Value (CLV) is the metric marketers measure to know how much each customer is worth. Ideally, you’d want to track how much a customer spends yearly because it gives you an idea of how productive they are versus other customers.
Aside from your brand’s Customer Lifetime Value, you also want to know the following metrics:
Purchase frequency– how often a customer buys from you
Average purchase value – how much each customer spends per transaction
Knowing all these metrics is crucial in starting various marketing campaigns, including a loyalty program, because they identify your weak points and opportunities.
An average customer spends 12,000 pesos yearly. They spend 2,000 pesos per transaction once every other month. This means that your customers aren’t buying from you for half the year.
If you can increase your CLV by getting them to purchase an additional two times per year, you can increase your revenue by 33%.
Growth Strategies for Your Business
There are thousands of ways to get your existing customers to buy more. You can see it in marketing campaigns successful brands are implementing globally. Ultimately, these strategies can be nested under four significant thrusts. These are: increasing purchase frequency, increasing purchase value, increasing basket size, and increasing advocacy.
Increasing Purchase Frequency
One of the most common strategies brands use to increase a customer’s lifetime value is increasing purchase frequency (getting people to buy more often). That’s because increasing purchase frequency can have the most significant margins or return for brands since they’re not inclined to give discounts.
A prevalent business strategy brands use to increase purchase frequency is fast product innovation. These brands know how people love to always have the latest things, which is why they always come up with new products.
A great example is Apple – the maker of everyone’s favorite iPhone. Notice that a couple of years ago, an iPhone had a lifespan of at least two years. The gap between the iPhone 5 and 6 was almost exactly two years. But now, iPhone is releasing a new iPhone almost every year. Did you notice that iPhone 13 and 14 only had a year between them?
This is also true with other companies like Samsung, who are trying to stay neck-and-neck with their competitor.
Outside the smartphone manufacturers, you’ll see this strategy more prevalently in the fashion industry. Many major fashion brands release new clothes every season, while those engaged in fast fashion roll out new designs almost every month!
Increasing Purchase Value
Another common strategy brands use to get more from their existing customers is increasing purchase value (getting them to buy a higher-valued item). Increasing a customer’s purchase value can be an excellent long-term play, mainly if they stick with the higher-priced item, even without your prompts.
This strategy can be implemented primarily on quick-service restaurants when the cashier asks, “would you like to upsize that.” Moreover, another subtle strategy companies use is the anchoring technique. This is when they present you with three options – Small, Medium, and Large – with the Large always being more bang-for-your-buck than the Medium one. So, you end up getting the Large option.
This is also where upselling comes in. Upselling is when brands ask you if you want an upgrade on your purchase. For instance, you’re buying the latest iPhone 14 ProMax 256GB, and the product specialist asks if you’ll get the 512GB instead to store more photos.
Increasing Basket Size
Increasing a basket size is when you encourage customers to get more products than they intended. You can see this often on e-commerce sites when they offer products that go well with what you’re buying. Or they’re suggesting products that are “frequently bought together” with what you’re buying. Traditionally, this is when cashiers at fast food restaurants ask if “you’d want some fries with that.” Or if you want to take home another order.
These strategies are usually called cross-selling. If upselling is upgrading a current product, cross-selling, on the other hand, is when you offer related products to make the purchase “better” for the consumer.
Going back to the smartphone example. Aside from upselling you with a higher memory, the product specialist might also offer you accessories like Bluetooth headphones, wireless chargers, and protective accessories for your gadget.
Increasing Customer Advocacy
The last strategy businesses use to earn more from their existing customers is to turn them into brand advocates who share the brand with friends and family.
Brands do this through gift cards, gift packages, or bundle promos for their customers.
Usually, you’ll see brands come up with special promos/bundles during hallmark events like Valentine’s Day, Father’s Day, Mother’s Day, and other celebrations. This is to encourage their existing customers to buy their products, not for them, but for those around them who might become customers too.
Another typical example is when restaurants do group meal deals, so you’ll bring your friends and family over for a meal.
Finding the Right Strategy for Your Brand
None of the strategies above are a one-size fits all approach. These are just guides and springboards for new ideas. Ultimately, what you need to do to find the right strategy is to listen to your customers and understand what they want.
Consumer behavior, preferences, and desires are reliable indicators of what strategies your brand needs to implement.
Ultimately, these strategies can be effective if you pair them with an enticing customer loyalty program because it increases customers’ likelihood of buying.