Repeat customers are those customers who come back to the online store to place another order, and, sometimes, would keep coming back repeatedly if the online store:
Provides products the customer requires periodically or on certain repeated occasions
Ensures that the customer is satisfied with the high-quality service provided on all stages of the purchase process, from browsing the product catalog to timely delivery of ordered goods
Is reasonably active in communications with the customer, so that the customer never forgets about the very existence of that particular online store, and is always informed about all updates and improvements of the product catalog
Apparently those may be not the only requirements for a customer to become a repeat customer, but they are some of the most important criteria that affect whether a customer will or will not become a repeat customer.
Why should an online store be bothered if its customers are eventually becoming repeat customers? What is it all about with repeat customers and why not just concentrate on product sales and not think about whether customers come back and become repeat customers?
The answer to that question is very simple. It's all about money.
There are two reasons why doing business with a repeat customer is cheaper (and more profitable!) than doing business with a new customer.
First of all, there is the so called "cost per acquisition". Usually, to "acquire" a customer the online store would have to spend a certain amount of money on advertising, PR, marketing, etc. Dividing the costs of certain advertising campaigns by the number of customers referred by those advertising campaigns to the online store will give the actual cost of each new customer's registration. Depending on general conversion rates and on advertisement costs in the selected media, cost per acquisition may vary and be hundreds of times different for different online stores.
As we demonstrated in Chapter 11 of this book, the cost per each visit (no matter if the visitor has placed an order or not), and the number of paid visitors compared to the total number of visits both play a serious role in defining the profitability of an online store and should be constantly improved to keep profitability growing or at least staying at the same level.
The more customers of an online store become its repeat customers, the less paid visitors the online store has to attract and convert into customers to produce the desired amount of turnover and profits. The more repeat customers the online store has, the more profitable is the business as there are no costs involved in motivating repeat customers to come to the online store and place an order (or at least it is considerably less expensive than motivating new visitors to come to the online store and place an order).
The second reason why repeat customers are profitable for an online store is that they refer other new customers to the online store. Recommendation from an existing customer is sometimes one of the most important and valuable factors that affect a prospective new customer's decision to place an order with one or another online store.
As we have mentioned above, attracting a repeat customer to come back to the online store can be almost free or cost considerably less than attracting a new customer. Since there's sometimes quite a valuable difference in costs, some online stores keep constantly rewarding their repeat customers with certain discounts and special offers available to the repeat customers only. That is why attracting a repeat customer to the online store may in fact cost the online store a certain amount (which is spent on discounts and special offers), even though it will still be cheaper than attracting completely new customers.
Having said all that, we now need to look more deeply into the difference between customers and repeat customers.
A customer is obviously an individual or a company that has placed at least one order with an online store. A repeat customer is ... but here definitions usually vary.
Some online merchants would consider a repeat customer an individual or a company that has placed at least two orders. So after the first order, at some moment of time, the customer decided to buy another product or several, went to the same online store and ordered them online. In fact this definition is right—as soon as the customer has placed the second order, the online merchant has received an additional profit as there were no customer acquisition costs involved into the whole second transaction.
But there are online merchants who would consider a repeat customer to be an individual or a company that has placed at least about eight to ten online orders! Of course it all depends on the nature of the product that is being sold online, on the target customer audience, and on the average margin the online store operates on. As to the margin in the previous phrase, it's quite obvious. The tighter is the average margin the online store operates on, the more the repeat visits by customers it will need to ensure the business profitability, because customer acquisition cost will be spread across all orders placed by the same customer.
If prospective customers may require products that are offered by the online store periodically (for example, consumables such as coffee, tea, wine, or printer cartridges, or spare computer parts, or collectibles such as stamps and coins, etc.) or from time to time on certain occasions (such as birthdays, anniversaries, etc.) converting customers into repeat customers and maintaining long term relationships with repeat customers becomes an opportunity for an online store to increase the profitability of the business.
Online stores may use different approaches to keep the customer interested in returning, and not starting shopping around on the Internet instead. Special business strategy can be developed to maintain relationships with the customer from the first order up until when the customer has become a definite repeat customer.
One of the possible strategies is as follows:
After the customer has placed the first order, the online store tries to cross-sell the customer certain products or services that may be complementary to the one(s) already purchased.
After the customer has placed the second order, and up to the moment the customer has placed the sixth or seventh order, the online store ensures the customer is always aware not only of all new products and special offers available to regular (new) customers, but, more importantly, of all new products and special offers available to repeat customers only!
Finally, after placing several orders with the online store, repeat customers become like member of an exclusive club, where members are given certain privileges, such as: additional features (for example a Personal Calendar), special prices, discounts, and exclusive products. Some online stores may open access to certain product ranges only to repeat customers not only because of the marketing strategy, but also because new customers may not have as much trust in that particular online store as repeat customers have, so new customers may not be ready to buy certain more expensive products online. Repeat customers can also be rewarded by special delivery options (like free next-day delivery, or free Saturday delivery), or special payment options (like pay on delivery, or a credit account) that are not usually available to regular customers.
Another possible strategy could be called "recurring subscriptions". It works perfectly well for businesses that sell consumables or products that customers are likely to require periodically.
Businesses like wine stores, food stores, some clothes stores, and printer stores can benefit a lot from selling their customers not individual orders, but rather recurring subscriptions. The customer chooses the desired product type, the number of products of each type to be delivered, and the frequency—it can be anything from, for example, once a week for coffee to once in a month for wine or several times in a year for socks.
Then the online store sends the first order, and the remaining deliveries follow according to the selected frequency of the subscription.
The margins of some online businesses can be tight, and customer acquisition costs very significant, and without repeat customers their business model may not work at all.
It becomes essential that such businesses develop their strategy on how to convert customers into repeat customers, and have a clear definition of when a customer becomes a repeat customer in their particular circumstances.
Keeping in touch with the customers is just one of many required activities that an online merchant should undertake to see more customers converting into repeat customers.
The database of customers should be supported and updated with the latest information about the customers and their orders.
Customers who placed an order with an online store, and have received some positive experience dealing with that online store, may just not remember its name afterwards. So when they require a similar product again, they would start a new search for such products in the Internet and this time may choose a competitor's online store.
The online store should constantly remind its customers about its very existence, about improvements that take place in the business (lowered product prices, new additions to the product catalog, improvements related to delivery options and customer support, and any business achievements—like local, regional, and nationwide business awards, etc.).
The online store should motivate its customers to be active in communications.
The online store should ask customers about their experience with the website and ordered products. Repeat customer feedback, reviews, comments, and suggestions are very important. Customers should know their opinion and comments have been heard, and, if they are experiencing any problem, it will be dealt with promptly, professionally, and to the customer's utmost satisfaction.
A repeat customer has received positive experience with the online store and/or with the products purchased online—with the customer's permission the online store should use such positive feedback on the website, in printed materials, advertising campaigns, etc.
Online merchants should be interested in getting more personal information about their customers. In osCommerce, a customer enters address and contact information during the registration process. The customer may also be invited to enter date of birth (which should never be a required field, but rather optional, unless certain age restrictions are applied to some products offered by the online store—DVD movies, printed materials, cutlery, weapons, products of undoubtedly adult nature, etc.).
To motivate a customer to order online, and create stronger relationships with the customer, having the date of birth stored in the database, the online store can automatically send the customer a special birthday discount voucher. Or for any other occasion, like national holidays, Christmas, Easter, etc. When sending a discount voucher it may make sense to highlight the fact that the vouchers are only sent to repeat customers. The feeling of exclusivity is important.
If an online store offers products that could be used as presents for people or companies on certain occasions, the idea of a Personal Calendar can be implemented in an osCommerce online store.
A Personal Calendar acts as a personal reminder to prevent customers forgetting about the birthdays, anniversaries, and other special occasions of their relatives, friends, colleagues at work, and business partners. Customers will have a facility to put any number of events into their Personal Calendars.
A number of event types and special occasions can be configured by the Administration of the online store. The online merchant can link products from the product catalog to various event types and occasions.
An automatic newsletter featuring specially selected products could be sent to a customer a week or two before each special event or occasion date from the customer's Personal Calendar. The newsletter will contain products recommended by the online merchant especially for that event type or occasion.
Of course, a text giving the customer a warm personal feeling will improve the look and feel of the newsletter.
There is no contribution available for osCommerce to implement support for a customer's Personal Calendar, but it is of course possible to hire a qualified developer to have that feature added to the online store.
A customer's order history can be of a great help to the online store, as it allows for finding out what the customer is usually interested in, and proposing to the customer other products that may also be of interest.
Even if the customer has placed only one order, it's still possible to assume the customer would be interested in this or that product based on the order history of other customers.
This conception is called cross-selling, and is used by many osCommerce online stores while the customer is browsing through the product catalog. We will consider how the cross-selling could be used to motivate customers to place more online orders.
After the order has been dispatched to the customer, the online store can send an automated email asking the customer to confirm whether the order has been delivered on time, or if the customer has any comments or suggestions on how the ordering or delivery processes could be improved. And along with that more or less standard text the email may also contain links to products that are complementary or related to the products recently purchased by the customer. If the email is sent in HTML format, links and even product images can be included.
The relations between the products could be set up either manually by the Administration of the online store, or be discovered based on analysis of orders placed by other customers.
Customers could be also offered discounts on products of certain categories they have ordered several times in the past. Then the customer will be more likely to order products belonging to those particular categories again in the future, and along with those products the online store could suggest to the customer some other related products.
Re-ordering functionality can make the whole order placement process very easy and quick for customers. So if the customers of an online store are likely to order the same combinations of products periodically, the online merchant may want to consider implementing the re-order facilities in customers' accounts and making the customers well aware of such facilities.
It is even possible to offer customers a special re-ordering discount if they order exactly the same configuration or combination of products as was on one of their previously placed orders. Some customers will then get used sooner to ordering such products from only that particular online store, and will not be tempted to start shopping around when they need the same products again in the future.
Technically, the re-ordering feature would simply add a predefined set of products to the Shopping Cart of an osCommerce-based online store. If some products are not available in stock or have been removed from the product catalog, a corresponding message should inform the customer and alternative products (at least from the same category) would be offered them.
Subscription is yet another way to convert a customer into a repeat customer. Of course it very much depends on the product range that the online store has to offer. There are quite a number of products that could be sold on subscription, such as CDs and DVDs, coffee, wine, collectibles—all things that the customer may have certain preferences about, and where the customer can choose between various categories of products to subscribe to.
Subscription is convenient to customers as there's no need to place new orders every time the customer needs some of the products—instead the products are sent by the online store at the desired time intervals. Subscription is of course very convenient to online merchants, as every subscriber automatically becomes a repeat customer—if the quality of the products and service meets customer's expectations.
Implementation of the subscription feature requires advanced osCommerce development skills, and it's better to allow a professional developer to implement this feature.
Online merchants should be aware of possible issues related to storing credit card information in their osCommerce database. The best solution to avoid any security issues would be to not store credit card information in osCommerce, but rather process subscription payments outside the osCommerce-based online store, and import the results of transactions afterwards.
Often a visitor starts the order placement process, but then either changes his or her mind or gets distracted, and as the result the order never gets completed.
Looking into conversion rates, it may be noticed that the number of customers who placed their online order is equal to or even less than the number of customers who went through the customer registration/login process, filled in their billing and delivery address details, and other information, but never actually completed their order! Some online stores lose up to 50% of prospective customers who have reached the very final step but never pressed the "Complete" button.
Good news for osCommerce online merchants! osCommerce creates a customer account during the checkout process, before the order is created. Therefore when using osCommerce, it is possible to extract information about those customers who added some products to their shopping carts, created their account or logged into an existing one, but never completed the order.
It is possible to create a special report in the Administration panel of osCommerce on unfinished orders. In fact, there's a contribution available for osCommerce called Recover Cart Sales that already does this. It can be downloaded from http://addons.oscommerce.com/info/1688.
Such reports provides the sales team of the online store with a facility to contact customers who abandoned the checkout process and their shopping carts. An automated email could be sent from the website to such customers, just to remind each customer about an unfinished order. There's always a possibility the customer did want to place an order but either the credit card didn't go through the payment processing gateway (but the customer would not mind paying using another card or another payment method) or the customer simply got distracted and never completed the order (but would not mind completing it now), and so on.
If the customer was going to buy some expensive goods, but abandoned the shopping cart, it may be indicating that the total order amount seemed too high for that customer. In that case, it may make sense to send an automated email to the customer several days or even weeks after the unfinished order was created and inform the customer about changes in price of those products, or about a special discount that could be only used by that customer and only by a certain date in the near future.
Since some product prices change quite often, the difference between the price the customer was quoted and the current price can be quite significant. For example, if the customer was going to buy products for total amount of $2,000, the total price of the same shopping cart can be 5% cheaper a month later, i.e. the customer would have had to pay only $1,900—it's a $100 cheaper deal! The customer could be informed about that fact via email, especially if the nature of products the online store has to offer suggests prospective customers do not usually require them urgently.
Or, if the sale price doesn't change, but the online store would still make a good profit on the content of the shopping cart if it was sold at a price 5% or even 10% cheaper than quoted to the customer earlier—a special email with an individual discount coupon (one usage by that particular customer only) could be issued by the online store in an automated email to the customer.
Taking into account that the number of unfinished orders could be approximately the same as or even larger than the number of finished orders—motivating customers to complete their unfinished orders can significantly increase the turnover figures, and also help convert more customers into repeat customers.
Loyal customers are what ensures success of an online store. Loyal customers are repeat customers; they would always come back to the website to place an order if they required products offered by the online store in the future.
The main principle an online store should follow to gain loyal customers is very simple and straightforward—it is to be loyal to its customers! Being loyal for an online store means, first of all, providing customers with products and service of the highest quality, and also trying to provide customers with the best price. Though as a matter of fact some customers are prepared to pay a bit more for the same product if they have total trust in their supplier. The combination of the highest quality of products, service, and the best price is unbeatable, and will guarantee customers becoming loyal customers.
There are certain methods that could make more customers loyal customers, such as for example the loyalty points program.
Each product can be given its bonus value and price in Loyalty Bonus Points. Each time a customer buys a product, its bonus points value is added to the customer's Loyalty Bonus Points account.
During the checkout process, the customer is given an opportunity to use the Loyalty Bonus Points account as a payment method either for some of the goods or for the whole order (often excluding the shipping fee). If the customer's Loyalty Bonus Points account doesn't have enough bonus points to pay for the selected goods, the rest of the order amount could be paid using regular payment methods.
A special automated email could be sent to customers motivating them to use their bonus points to buy certain products. That email could list the bonus points price of products the customer can afford to buy using the Loyalty Bonus Points account.
There are several solutions for osCommerce that implement the functionality of loyalty program. One is called Points and Rewards Module and is available for download from http://addons.oscommerce.com/info/3220.
This solution is a Points and Rewards system, (more or like a cash back or discount system) aimed to improve online sales and get new users to sign up. The system awards shopping points to customers for the amount they spend.
According to its description, features for online merchants include:
Enable/disable the Points System
Enable/disable the Redemptions System—maybe you would like to offer a gift and not money back
Set the number of points awarded for every $1.00 spent (or based on the currency system)
Set the value of each point (based on the currency system)
Snable/disable points awarded for shipping fees
Enable/disable Products Restriction
Enable/disable Points Limitation and set the number of points needed before they can be redeemed
Enable/disable Welcome Points, and set the Points amount to be auto-credited to newly signed up customers
Features for end customers are:
Newly registered customers can be awarded welcome points.
Customers can earn points for every item purchased at the store.
Customers can choose the amount of points they would like to spend to pay for some products offered by the online store.
Customers can view their shopping points account status.
Earned reward points cannot be spent without an approval given by the Administration of the online store. Once pending points are approved by the Administration, they become available to customers. Redeemed points stay recorded in customer's order history.
Another available solution is a bit simpler, and allows for giving customers certain discounts based on the amount they have spent with the online store in the past. It's called Customer Loyalty Discount Scheme and can be downloaded from http://addons.oscommerce.com/info/1286.
It is possible to set different discounts depending on if the customer has spent a certain amount during certain time period. The time period can be also configured in the back end of the online store.
The discount is implemented as an order total module for osCommerce. Customers can see their discounts applicable to newly placed orders during the checkout process.
It's not only the products the customers could get Loyalty Bonus Points for; customers could refer other customers to the online store. If a referred customer places an order, the full order amount of Loyalty Bonus Points could be put in the new customer's account, but also, in addition to that, a certain amount of the order's Loyalty Bonus Points could be put in the account of the referrer. To refer other prospective customers to the online store existing customers could use the Tell a Friend-like feature to send an inviting email to their friends, relatives, colleagues, etc.
Yet another idea for an online merchant to explorer to get more loyal customers and at the same time attract more new customers, is to give customers a discount coupon that could be used either by the customers themselves, or maybe by their friends, relatives, colleagues, neighbors, and so on.
Such discount coupons should be delivered to the customer in a way that will not allow them to be missed. A discount coupon code could be issued for each customer automatically, and then printed on the invoice and dispatch note that are sent to the customer along with the ordered products. This approach will ensure the customer gets the discount coupon code.
Also, if the customer orders a present for someone else (i.e. billing and delivery addresses are different), putting a discount coupon code on both the invoice and dispatch note will ensure both the customer and the recipient of the present will get a discount coupon and may order again. The amount of the discount should be always less than the average cost per acquisition. As no or almost no expenses are involved if either the customer or the recipient of the order places another order with the online store—the deal will be always profitable for the online merchant.
Loyal customers become such when they have constant positive experience with the online store, throughout the whole pre-sale, sale, and after-sale process. Everything matters, and everything can make a difference. Simple navigation on the website, complete product description and clean and crisp images, secure and simple, straightforward checkout process, understandable confirmation emails, facility to track order status and status of the delivery, immediate availability of the customer support team, surprise gifts from the online store sent along with the order, even the way the products are packaged, all these can affect the customer's decision whether or not to place another order with the online store.
Creating positive customer experience and maintaining it on a proper level is an important duty of an online merchant.
Repeat or loyal customers are what make many online stores really successful in business. For an online store having repeat customers is profitable, first of all because if the customer places several online orders—cost per customer acquisition is spread equally between all those several transactions. Secondly, it's profitable because repeat customers will more likely recommend their favorite online stores to friends, relatives, colleagues, business partners, etc.
An osCommerce-based solution can be used to convert more customers into repeat customers. There are many approaches that an online merchant could use to increase that conversion rate, like for example motivating customers to purchase products complementary to products they have already ordered, or constantly informing repeat customers about new additions to the product catalog, and special prices only available to repeat customers, or making certain special features of the online store, special delivery and payment methods, or specific product ranges available to repeat customers only.
Customers should be motivated to become loyal customers. An online store should provide loyal customers with additional benefits, like for example Loyalty Bonus Points that could be used to pay for online orders along with other payment methods. Depending on the implementation, repeat customers can log into their osCommerce accounts and see their Loyalty Bonus Points balance and also the list of products that could be bought for those points. Or instead they could get a discount each time they place new online orders depending on how much they have already spent during the previous month or any other time period. Repeat customers could also get rewarded for referring other customers to the online store.
Online merchants should keep in constant contact with the customers, listen to their comments and suggestions, instantly and professionally deal with any issues and ensure positive repeat customer feedback is made available to as many visitors and new customers as possible.