A company can use all the marketing strategies and meticulously designed campaigns in the world, but those efforts may only go so far as to make people visit the company’s online store and maybe make one purchase. Keeping a customer for life is a different proposition altogether. It costs five times as much to acquire a new customer as it does to retain an existing one. While this figure is well researched and acknowledged, still around 44 percent of companies will focus on customer acquisition while 18 percent focus on retaining existing customers.
You have about a 70 percent chance of selling to an existing customer, compared with a maximum chance of around 20 percent of selling to a new customer. So what makes someone become a loyal customer for life? There are many aspects, but they all revolve around the primary focus of exceptional customer service.
There are a number of brands that are changing the playing field by offering unbelievable warrantees and return policies that not only delight customers, but also encourage them to stick around for life, not to mention the free advertising and brand promotion a single customer can do within his or her network.
Zappos has clearly raised the bar of customer service, and its exploits are well known in the retail industry. Apart from the many heartwarming stories where Zappos customer reps have gone way beyond the call of duty to delight customers, the company also has an amazing returns policy. It allows people to return their purchases within 365 days if they aren’t completely happy with the product they bought.
In fact, Zappos encourages returns. It recommends several products to shoppers, who can buy them, try them and then keep what they like and return the rest. This builds customer confidence and makes people comfortable.
Although Zappos does have some rules about returns and refunds, there have been instances where the company’s empowered “change agents” (a.k.a. customer service reps) have gone out of their way to facilitate the return of even used products. Consider the experience of a fitness enthusiast who exchanged a pair of shoes in which he had already run 450 miles. Not only did Zappos send him a new pair of shoes, it also sent him $35 refund because the price of the shoes had dropped. It also upgraded him to VIP membership! Who does that? Zappos, apparently.
Bluestone is an Indian online jewelry store. It was one of the first brands to venture into jewelry e-commerce in a traditional market like India, where buying jewelry is a highly personal experience. To attract first-time customers and to retain existing ones, Bluestone has a 30-day money-back policy. It gives people the option of using the credited amount for another purchase or refunds it back to the customer’s bank account.
Apart from this policy, and the free shipping to and fro, the company also offers a lifetime buy-back and exchange policy through which customers can either exchange their jewelry for a new item or sell it back to the company. It also provides transit insurance so that customers don’t have to worry about lost shipments. In a high-value market, this is a great way to build trust.
Saddleback manufactures leather bags (luggage and overnight bags, tote bags, handbags, backpacks, etc.), wallets and accessories. Its products have a sort of cult-like following among its die-hard customers.
The company takes so much pride in its products and has so much confidence in their craftsmanship that it offers a 100-year warranty against defects in materials and workmanship. “They’ll fight over it when you’re dead” the company says on its warranty policy page, proclaiming its commitment to quality and customer delight. Apart from this outrageous, but iron-clad, warranty, the company also offers a 30-day money-back guarantee.
Saddleback’s website also sells select products from Love 41, its sister company. Apart from the fact that its origins can be found in the deep desire of its founder to bring about a change in the lives of citizens of war-torn Rwanda, the company manufactures exquisite leather bags and accessories for women. Just like Saddleback Leather, Love 41 also offers a stunning warranty against defects in materials and workmanship for 41 years.
Retailer L.L. Bean started as a one-man operation in 1912, selling clothes, footwear and outdoor gear. It ventured into e-commerce in 1995 and has become one of the world’s most renowned online retailers.
True to the principles of its founder, Leon Leonwood Bean, the company believes that a sale isn’t complete until the “goods are worn out and the customer still satisfied.” L.L. Bean’s “100 percent satisfaction guarantee” allows customers to return anything purchased from the company at any time if the product doesn’t prove to be satisfactory. Regardless of whether the customer has a receipt for the item purchased or not (barring certain very limited and special scenarios), the item can be returned.
A customer-friendly return policy and a replacement warranty are at the base of a strong commitment to delighting customers. As noted earlier, customer retention costs less than customer acquisition, and an existing customer is 67% more likely to spend more money than a new customer. It is in the interests of the company to earn customer confidence by giving them the assurance that their hard-earned money isn’t going to be wasted on products they don’t like.
Dipti Parmar is an experienced marketing and technology consultant, helping startups, ecommerce brands, and B2B SaaS companies establish thought leadership in their industry with innovative strategies through her agency 99stairs. She is a columnist for leading business and tech publications such as Entrepreneur Mag, Adobe's CMO.com, and Inc. Dipti has also been listed as a top startup marketer by TechCrunch.
When she's not drinking her team's blood (figuratively), she is busy telling vampire stories to little girls who like Disney princesses. Follow @dipTparmar on Twitter for her best insights.