According to Barry Moltz, an entrepreneurship and small-business management expert, new customers often fail to return for the following reasons.
Most businesses understand that acquiring first-time customers takes considerable effort. Some, particularly internet businesses, discount initial transactions to attract new customers. Others win them over with numerous promises about the benefits their products or services will provide.
However, getting them to return for a second purchase or many subsequent purchases is a major challenge.
Buy a business's products or services because they are discounted
Many companies think discounting is the most effective way to win their first customers. According to Moltz, however, the problem is that many people buy only when items are discounted. Many e-commerce companies use this approach, hoping customers will try their products or services at discounts of 50% or more and then return to buy at regular prices.
These companies see discounts as a necessary customer-acquisition cost because a customer’s lifetime value will be much greater. In practice, however, customers drawn by discounts do not want to return and pay more for the same product or service. Many businesses therefore must discount not only the first purchase but also the second and third to ensure customers return.
The product or service they buy is just an ordinary commodity
For an ordinary product, customers usually make purchasing decisions based on price and convenience. That means they will buy the same item from whichever seller or location they find most convenient and best priced. To keep customers returning whenever they need the type of product or service it sells, a business must offer something distinctive beyond the product's basic value.
According to Moltz, many customers want a highly personal experience or relationship, not merely to buy a product or service. By finding ways to add positive experiences for customers, businesses can distinguish themselves from competitors.
For example, if most cinemas in a city are showing the same 10 films, those with comfortable seating and surroundings and premium food services can enhance the customer experience and attract more moviegoers.
The business's product does not help them address a recurring “pain point”
In theory, customers always buy a product or service to address a major need or a “pain point.” But if the product or service does not help them solve a recurring difficulty, they may buy from the business only once.
Property valuation is an example. Many people need this service only when buying a new home, perhaps once every 10 years. To address this, property valuation companies need to broaden their customer base to those with recurring needs. They can approach real estate brokerage firms.
Not receiving a great experience
Businesses often have only one chance to win customers over. If they do not create a good experience that exceeds expectations on the first purchase, customers will not return. This often happens when companies focus only on acquiring customers and making sales, rather than on customers' experiences while purchasing or actually using the product.
Moltz advises businesses to understand this entire process to improve customer experience. This requires identifying the “personas” or types of customers buying from them and the various touchpoints where customers interact with the business throughout purchasing and product use. Businesses should also understand customers' expectations at each stage to identify shortcomings that need improvement.
According to Gregory Ciotti, a marketing strategist at Help Scout (a provider of email software solutions for small businesses), sometimes a slight adjustment in how a business communicates with customers can create personalized, distinctive experiences for them.
For example, Ciotti advises that when a customer calls with a question, instead of saying, ‘Sorry, I will transfer your call to Department XYZ,’ say, ‘Hello. We will resolve this for you right away. I will transfer your call to specialist ABC, who is best placed to answer your question.’
Collected.
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