Every once in a while, Gorillas — the fast bikers delivering - slightly more up-scale groceries to your door — entice me with an offer I just can’t refuse, giving me 15 EUR off on a 25 EUR order value. But after taking them up on this offer, I immediately go back to the old-school brick and mortar supermarket. Why? Because it’s what I’m used to, it’s still slightly cheaper, and it’s not that painful to walk 5 minutes to the grocery shop down the street. For me to become a loyal customer, they would need to break a pattern and change my habits.
Getting customers to come back after their first purchase is a common business challenge. Especially if you’re spending hundreds of euros on each customer through digital ads and discounts, immediate churn is painful. In many cases, businesses fail because of this.
They are breaking one (or more) of the cardinal rules:
Live up to your promises, don’t optimize your ads for the click
It’s essential to be clear about your target audience before you do anything else. Be brave enough to pick a niche, tightly-knit, self-referencing group, for which you can solve real pain in a way that nobody else is. Once you know who they are, never stop asking yourself the key questions:
- What do they want?
- What do they value?
- How do they see the world?
- What frustrates them?
- How big is their pain?
Business departments often seem to operate in silos: Marketing is completely segregated from Product/Tech, and Sales has no idea what Business Development is doing. The Marketing department optimizes its ads to get the most clicks, Sales says ‘yes’ to whatever the prospect asks for, and the product in no way delivers on the promises that were made.
If the whole business is truly customer-centric and committed to creating something drastically better for a specific target customer, you can:
- Make sure that the right people are coming into your funnel (and the wrong people are immediately turned away, since it’s clearly not for them)
- Make sure that the experience and message fit to them every step of the way
- Create a simple, lightweight product & service that delivers on your promises (remember: humans like single-function products!)
Your product should be the only clear answer for a specific enough target audience. Give them a reason to tell their peers about you (a referral fee doesn’t cut it anymore).
Invest into breaking the habit.
Get ready to play the long game. Let’s take the Gorillas example: If it really takes 66 days to change a habit, and we assume the average consumer visiting a supermarket once a week, then 10 discounted purchases should do the trick.
Don’t expect results too soon: If you give up after 9 discounts, it will be money down the drain.
Don’t chase the sale, but go the extra mile for your existing customers
The number of signups, warm leads, and ‘likes’ are all fun metrics, but often not the ones that move the needle. Vanity metrics are a dangerous distraction.
Set a limited number of SMART goals for your company to understand what your focus should be and which KPIs you should be tracking. For most companies, (monthly / weekly / daily) active users and revenue will be the real indicators of a healthy company. Considering how expensive it can be to acquire a customer, it makes sense to get the most value out of your existing customers.
Look into your existing customer base and see how you can create an even better experience for them. Is there more work you can do for them? Can you create magic moments, and show your loyal customers how important they are to you?
Understand the context that you are operating in
Human behavior doesn’t happen in a sterile environment but in the context of external factors outside of your control. It’s imperative to not only understand these external factors, but also the internal forces and biases that drive your customers’ behavior.
Are they overwhelmed by cognitive overload? Are you approaching the problem with logic, while you should be thinking outside of the box? Why did they really choose your product when they purchased it that first time?
Modern companies and VCs such as Pair Finance, Coachhub, and Morphais VC have recognized this and installed Behavioral Science departments in-house.
Find more business help here: www.sonderhouse.io