Part of a series of 7 blogs taking you through the 7 ways to grow your business, this blog is focused on how to increase transaction frequency. Simply put this is about getting your customers to buy from you more frequently.
Did you know you the success rate of selling to an existing customer is between 60 & 70%, and the success rate of selling to a new customer is 5-20%?
Increasing the number of times, a customer comes back to you will not only cost you less to generate the income, in fact it will cost you 6 times less to sell to an existing customer compared to a new customer, but it could also increase your profit margins.
To understand why this is such a valuable way to grow you can quickly do another piece of simple maths
(Number of customers / Number of invoices raised) x 100 = Transaction Frequency (%)
From this you can work out how much growth can come from transaction frequency. Even just getting customers that purchase from you once a year to purchase from you twice a year, will make a huge difference!
You can then calculate your repeat customer rate using this simple formula:
(Number of customers with more than 1 purchase / Total number of customers) x 100 = Repeat Customers (%)
So, if you have 2000 customers purchase from you in the past year and 500 of them were returning customers, your Repeat Customer Rate is 25%.
So now you’re measuring this simple metric it is important to understand what good looks like so you can increase transaction frequency and in all honesty the benchmarks around this vary across industries.
However, if you have around 50% or more that are repeat customers, you may want to consider expanding your customer base to strike a healthy balance between repeat buyers and new customers. This is because all customers have a lifetime, a time in which they will purchase and then stop purchasing. So, being too reliant on repeat business will leave your business exposed.
On the other hand, if you have less than 25% of customers returning to purchase from you, you are missing out on additional revenue and should start to target your one-time customers to increase transaction frequency.
So, how easy is it to increase transaction frequency?
Many of the strategies that you could implement are simple, low-cost and easy to introduce. It is important for you to make it as easy and as valuable as possible for the customer to do business with you. This coupled with a great customer experience will help ensure you increase transaction frequency.
Further to this, if you are in the position to introduce any automation, speed will also be a significant benefit, you will win business from existing customers much quicker!
Before you start engaging with customers, it is worth having a simple review of the products and or services you sell more of, to your current repeat customers. This will help you simplify what you are sending to customers.
Transaction frequency strategies:
- Special offers
- Seasonal offers
- Loyalty events – social / no obligations environment
- BAMFAM (Book A Meeting from A Meeting)
- Introducing VIP / membership cards
Top Tip: By making you and/or your team more accessible to your customers and responding quickly, you will subconsciously train them to call you sooner and for smaller issues. This provides your customers with more value while you increase transaction frequency.
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