You’ve probably heard that it’s cheaper to retain customers than it is to find new ones. That’s true! This applies to all businesses, from retail to financial services.
Achieving a 100 percent return rate is impossible. However, there are ways you can increase yours. That said, what customer return rate should you strive for? Below, I define customer return rate, let you know what a good range is, and give advice on how to improve it!
Defining Customer Return Rate
Your customer return rate measures the percentage of customers who make another purchase after their initial transactions—simple as that!
How To Calculate Customer Return Rate
You can calculate the rate by totaling the number of customers who patronized your business at least twice and dividing that by all your customers from a recent period. For example, let’s say your business processed payments from 100 people in a week, and 10 of those people returned within that week. Dividing 10 by 100, we get a customer return rate of 10 percent for that week.
You can perform this calculation regularly at different intervals, from weekly to monthly to quarterly.
What Is a Good Customer Return Rate?
A high customer return rate indicates that your customers are satisfied and find value in what you offer, prompting them to come back. So what customer return rate should you strive for? While the ideal rate can vary depending on your industry, a general aim would be between 20 and 40 percent.
How To Improve Your Customer Return Rate
Is your rate lower than 20 percent? That could be fine depending on your industry, but it’s never a bad idea to work toward improvement. Below are the best ways to boost your rate.
Never Compromise on Your Customer Service
First things first, focus on providing an excellent customer experience. From the moment clients interact with your brand until they complete their purchase, every touchpoint should be pleasant and seamless.
To do this, you’ll need a user-friendly website and payment processing method that are fast and clear—no hidden fees, small print, or confusing navigation. Helpful online blogs and videos, which are great creative technical resources for business growth, can also improve customer experience. Finally, you want to have help available 24/7 for customer inquiries.
Offer Loyalty Programs
By rewarding repeat customers with points, discounts, or exclusive offers, you entice them to keep coming back. These programs create a sense of investment and appreciation, incentivizing further engagement with your brand.
Maintain Consistent Quality
If a customer is satisfied with your product, they’re already a good candidate for a repeat purchase. If they make a second purchase and are also satisfied with that, then they become even more likely to make a third. This cycle goes on and on. Basically, consistency is key!
Do everything in your power to produce quality products and keep them that way. Invest in strict quality control methods, partner with reputable suppliers, and never sacrifice quality for efficiency or savings. For example, weak packaging is cheaper to produce, but proper packaging protects your bottom line by making sure products arrive safely to customers, avoiding returns and refunds.
In the end, your goal should be to create a business environment where customers feel valued, appreciated, and eager to return. If you do that, you’re setting the foundation for a high customer return rate. Here’s to your success!
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