The Value of a Customer
It is generally acknowledged that making a sale to an existing customer is more profitable than attracting and making a sale to a new customer. This is because new customers are often attracted to your products / services after seeing advertising (i.e. Yellow Pages, Offline / Online advertisement) and that a new customer is likely to take up more of your time (making enquiries, etc.) before making a purchase. Obviously it is important that businesses attract new customers but it is imperative that they don't overlook the value of existing customers. A few reasons why this is the case...
- Assuming the existing customer is signed up to a businesses contact database it should be easy to entice them to make further purchases by sending cost effective email campaigns.
- Existing customers will have previously purchased from a businesses website. A large hurdle in making a website visitor a customer is giving them the confidence to trust a website. Existing customers should not only be confident about using a businesses website they should also have they ability to store details enabling the check out process to be quick and simple.
- Existing customers will have experienced a businesses customer service. A portion of any sale can be attributed to customer service. If a customer needs to return an item is it going to be painless? If they have questions regarding the product / services is the business going to be easily contactable? A new customer will have no knowledge of how good a businesses cutostomer service is, an existing customer should already be impressed.
- and there are many more experiences an existing customer will have had when originally making a purchase including prompt delivery times, the good value of the goods / services, the high quality of goods / services, etc.
Recently a number of clients gave me an example of the value they gave to capturing an existing customer contact details and I would like to share that example with you.
As you may or may not know I work with a number of tourist attractions and along with Tribalogic, an Edinburgh based software team, I provide a booking engine called 'Bookster Showtime'. This engine allows Attractions, Venues and Performers to easily sell tickets via their own website and any number of third party sites.
The booking engine works in a fairly standard manner in that the user who is purchasing a ticket pays a small 'booking fee' on top of the ticket price. The booking fee is not seen by the Attraction but is essentially the cost of using the software. Understandably most Attractions prefer not to reduce their online ticket prices to take account of the booking fee but instead see the ability of pre purchasing an admission ticket as a service worth paying a little extra for. This obviously means that a visitor not pre purchasing a ticket but turning up to an Attraction and buying a ticket directly will pay a little less. For an Attraction however this has a disadvantage. Visitors purchasing tickets directly very rarely leave contact details and as such the Attraction has no way of enticing that visitor back. As they have no email address they cannot inform them about any new merchandise they stock, about any upcoming events or about any Special Offers.
As such a number of Attractions have or are considering discounting their online ticket price to take account of the 'booking fee' in the hope that a larger percentage of visitors will start to pre purchase tickets online. Obviously pre purchased tickets have a number of advantages to Attractions but the main benefit is that an Attraction captures the visitors contact details and can therefore target them in any future marketing campaigns. So what discounts are the Attractions applying to ensure visitors buy tickets online and that they capture contact details? Generally it is 10% and with the average ticket price being £10 the value of the contact details to this set of attractions is approximately £1.00.
2 Comments
Reader Comments (2)
Hi Ross
"Assuming the existing customer is signed up to a businesses contact database it should be easy to entice them to make further purchases by sending cost effective email campaigns."
Hmmm...
Perhaps easy is too much of a generalisation. I'd say 'easier' :)
There's also the purchase life-cycle to consider here. White goods and cars would be things which might only get changed every 5 years. TV used to be 7!
Cheers
Ralph
http://corporate.electricnews.net