Every time you turn around these days, a business hands you a loyalty card. From the paper punch card for your local CD store to plastic Borders Rewards and frequent flyer memberships, your wallet is undoubtedly stuffed with bait that companies use to lure you back time after time. After all, it's easier and more profitable to generate business from repeat customers than to troll for new ones.
For that reason, startups must develop strategies for generating repeat business even before they hang out their shingle. The process begins with the business concept itself and continues with everything from how you answer the phone to how you keep your name in front of your customers. The mission is to cultivate loyal customers who not only keep coming back themselves, but who also spread the word to friends and family.
Developing this kind of solid customer base requires a mix of art and science. Creating memorable branding, for instance, is easier said than done. But there are some standard rules and tools you can use to help.
1. Build your business plan around a product or service that has a repeat buy. Razor manufacturers have razor blades; iPod has iTunes; nail salons, landscapers, accountants and window washers have services that people need again and again. It's critical to either go into a business that has inherent repeat sales opportunities, or create a business model that'll bring customers back on a recurring basis.
2. Never compete on price alone. If you do, there'll be no reason for customers to return if a competitor has a better deal. You need to offer added value, whether it's a strong guarantee or better call handling, to draw customers permanently into the fold.
3. Capture customer information. If you don't know who your customers are, you can't stay in touch with them. Gather names and contact information any way you can. If you're an online business, you can offer opt-in registration for e-mail communications. If you're a brick-and-mortar establishment, you can offer a gift certificate for filling out a contact card, collect business cards in a fishbowl for a drawing and request information on feedback forms. Be creative.
4. Send handwritten thank-you notes. It's old-fashioned, but it's still a good way to show customers that you want their business. Even Nordstrom salespeople send an occasional note. Just be sure it's personalized. "Dear Valued Customer" will defeat the purpose.
5. Call your customers. Sometimes just asking for repeat business does the trick. Consider the case of a chiropractor in Georgia whose appointment book was getting noticeably thinner. She hired a high school student to call clients she hadn't seen for three months or more. The effort doubled her business at virtually no cost.
6. Send "it's time" reminders. Dentists send cards; auto mechanics post stickers with odometer readings on your windshield to remind you of your next oil change. The same technique works in any business that offers regular or seasonal service. In one case, a barber shop that started sending self-addressed reminder postcards boosted business by decreasing the average time between haircuts from six weeks to four.
7. Create customer rewards programs. Whether it's a discount during the customer's birthday month, "Buy 12 loaves of bread, get the 13th free" or an invitation-only sale for preferred customers, rewarding customers for loyalty is a good business practice.
8. Communicate through e-mail and direct-mail channels. Informing customers about promotions, new products or other news gives you an excuse to keep your business top-of-mind. And contrary to popular opinion, e-mail doesn't require deep pockets or a technical staff. There are companies that will handle both e-mail design and mailing for pennies per customer.
9. Invest in leave-behinds. Calendars, refrigerator magnets, pens and mouse pads branded with your corporate identity are another tried-and-true method of reminding customers you exist. It's hard for a customer to ignore something that's staring him in the face.
10. Make customer service your top priority. There's simply no substitute for the brand experience. If you can't win battles like delivering on time and soothing customers' ruffled feathers, you'll lose the war.
Remember, the path to profitability is paved with repeat customers. There are as many ways to build repeat business as there are SIC codes, but you need to lay the groundwork from the minute you start writing your business plan. The goal is to sketch out a scheme that'll create customers for life. If you can do that, you're at least halfway to ensuring your business will be around for the long haul.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.
Brad Sugars is the founder and chairman of ActionCOACH. As an entrepreneur, author and business coach, he has owned and operated more than two dozen companies including his main company, ActionCOACH, which has more than 1,000 offices in 34 countries.