Unlocking retail’s second purchase opportunity
Increasing customer acquisition and strengthening customer loyalty regularly top the list of retail goals.
It makes sense. First, you need to attract new customers to fuel significant growth to your customer base. Second, driving purchases from loyal customers is easier and less expensive than driving purchases from non-customers (or even infrequent buyers). Plus those loyal customers are likely to spend more on each purchase and are more likely to forgive mistakes.
But there’s something missing.
You can’t just jump straight from new customer to loyal customer (or even repeat customer for that matter). There are a few steps you have to take in between, namely driving that second purchase.
The One-Time Buyer Problem
Increasing customer acquisition is an important goal, but it’s only the first step. What happens after you acquire those new customers is critical, because if you let those one-time buyers becomes only-time buyers your customer acquisition strategy won’t deliver the desired long term benefits.
Short term, the benefits of increasing customer acquisition are clear: You drive additional revenue from an entirely new stream of customers.
But customer acquisition can get expensive. As a result, in order to see the maximum ROI from your customer acquisition efforts, you need a long term plan to turn those one-time buyers into repeat buyers. Only then will you reach a point where you’re not just churning out new customers regularly, but also converting those new customers into loyal shoppers with a high customer lifetime value.
Think about it this way: Would you rather acquire 100 new customers who only make one purchase of $100 each (delivering an additional $10,000 in near term revenue) or acquire 30 new customers who make $100 purchases on an ongoing basis (delivering an additional $3,000 in near term revenue, but a potential to repeat and grow that near term revenue again and again over the course of their lifetime with your brand)?
The Second Purchase Opportunity
So how do you reap the long term benefits of your customer acquisition strategy? Sure, you need strong customer retention and loyalty strategies, but you can’t put those strategies into action if you don’t get to the second purchase.
In fact, the second purchase is the most important purchase in the customer lifecycle. That’s because crossing the chasm from one-time buyer to two-timer buyer delivers the biggest increase in likelihood that customers will purchase again as well as the biggest increase in customer lifetime value.
Making the Leap from First Purchase to Second Purchase
Despite the enormous value of driving second purchases, turning one-time buyers into two-time buyers proves one of the biggest challenges retailers face.
Just look at apparel retailers, for whom nearly 80% of customers are one-time buyers.
On the one hand, that’s a problem. Fortunately, it’s a problem that has a solution. Because with the right second purchase strategy, revenue opportunities abound.
In fact, looking at a group of 100,000 apparel customers (of which 80,000 are one-time buyers), driving a second purchase from just 5% of those one-time buyers would deliver a potential $550,000 in additional revenue over the next two years (based on an average order value of $100).
How to Capitalize on Your Second Purchase Opportunity
It’s clear that the second purchase is a critical juncture for driving revenue gains in both the short and long term. But how do you actually turn one-time buyers into two-time buyers? It’s all about developing and executing a thoughtful second purchase strategy.
What exactly does that take? Find out everything you need to know about the second purchase opportunity and how to put your second purchase strategy into motion in our eBook, The One-and-Done Buyer Problem.