Encourage Repeat Buyers by Creating A "VIP Customer Group"

When starting a new business, most of your time and energy is spent on brand awareness and acquiring new customers. However, there will come a time when it becomes far more profitable to convert existing customers than it is to acquire new first-time transactions. Encouraging repeat purchases from your existing customer base will boost your bottom line without having to increase your ad spend.

Why are new customers not as profitable as loyal customers that repeatedly purchase? Loyal customers have the potential to become lifelong customers, resulting in a higher lifetime value (LTV).

What is Customer Lifetime Value?

Customer lifetime value is another important metric to keep tabs on and is commonly referred to as LTV, total customer value or CLV. It's used to determine the amount a customer contributes to your business over their entire relationship with your brand. LTV helps you think about how to optimize your ad spend for maximum value rather than minimum cost.

How to Calculate Customer Lifetime Value

There are several ways to calculate LTV, but more important than which method you use is consistency once that decision is made. Ometria has an excellent tutorial on how to calculate LTV.

So, how can you increase retention and customer lifetime value? You do this by implementing a good loyalty program that encourages your customers to buy again and again.

What Is a Customer Loyalty Program?

Loyalty programs reward customers who frequently make purchases and may give a customer early access to new products, exclusive sales or free merchandise. Additionally, they can be used to incentivize one-time buyers to return to your store. Airline frequent flyer miles is an excellent example of a loyalty program.

There are many benefits to starting a loyalty program, but the most significant advantage is that you can begin catering to customers that purchase often and spend the most. To design an effective loyalty program, make it customer-friendly by keeping things simple as possible. The best loyalty programs are easy to use and easy to understand.

How to Create & Implement a Customer Loyalty Program Using Customer Insights

Customer Insights can be a handy tool in helping you understand your customers and their relationship with your products and brand. Ecommerce Insights automatically groups customers for you based on activity and purchase habits.

Start by focusing on the Best Customers and Best Full Price Customers reports.

The Best Customers and Best Full-Price Customers reports

Customers in the Best Customers report are the top 20% in terms of number of orders and in total spending over the last 30 days. They are customers that spend often and spend the most.

Customers in the Best Full Price Customers report buy all products at full price, have purchased within the last 30 days, and are in the top 20% in terms of number of orders and total spending.

These customers are prime candidates for your loyalty program and marketing efforts. You can export these lists via the Export button and then import them into your email marketing platform.

The Export button for the Best Customers report

You can then reward them each month with exclusive offers and special privileges. For example, shipping could be free for your best and full price customers, or you could showcase new products exclusively to this customer segment before making them available to your general customer base.

Pro Tip! If you're unfamiliar with restricting products to customer segments, see Restricting Products to Customer Groups. Note that the customer group feature is available on select BigCommerce plans.

If you're not using an email marketing platform, our App Marketplace offers a variety of integrations:

Making your best and full price customers feel appreciated will keep them coming back again and again. To compliment your marketing efforts, you can implement a loyalty program using one of the many loyalty apps available in the App Marketplace:

Although the primary purpose of a loyalty program is to increase repeat orders by retaining existing customers, it can also be used as a means to attract new customers. You can offer several kinds of rewards from free shipping to discounts to store credit. It's tempting to assume that strong rewards will lead to a successful loyalty program. On the contrary, an easy to use loyalty program will always outperform ones that offer greater rewards.

Example of loyalty rewards

You'll need to decide how your customers will access and use their rewards once they've been earned. This is where most stores make the mistake of complicating the program. Make it easy for your customers to receive, redeem and use their rewards.

Customer Insights can not only help improve your relationships with your best customers, but it can also help you engage new customers or customers that spend often but don't spend as much. Low spenders can be targeted with offers to try and improve their lifetime value or can help off-load excess inventory. We will go into more detail in the following chapter.

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