I recently redeemed a daily deal coupon at a restaurant. I paid $20 for $40 worth of food. The restaurant and the coupon vendor split the $20 I paid, meaning the restaurant collected $10 on a $40 bill. The restaurant probably lost money on the transaction.
This was my first time at this restaurant. I enjoyed the meal. I would consider returning again, but I would not put the restaurant on my A-list of must-visit spots. How will the restaurant entice me to return?
The restaurant has an email newsletter, Facebook page and Twitter feed. But while I was there I never had a chance to join or follow. No one asked me to sign up. I saw no advertisements to connect. As a result, the restaurant missed an opportunity to build a relationship with me that might lead to future profitable transactions.
The next day I read an article in The New York Times that described how businesses have soured on daily deals because, in many cases, they lose money on them. The article quoted a restaurateur who complained that a daily coupon deal attracted customers who never returned.
My question for that restaurateur: What did you do to entice them to return?
My question for you: What do you do to establish and nurture relationships with first-time customers so they will return and spend, again and again?
When you acquire a new customer, you should do everything you can to build an ongoing relationship. Ask her to join your email list (don’t just hope she’ll know about it and join on her own accord). Send her a thank-you note welcoming her as “part of the family.” Offer entertaining, informative, educational and interactive content. Send her more special offers – ones that are enticing but not as expensive as the initial offer. Invite her to connect with you on social media.
If you do this, customers will return. They will spend more. They will refer others. The revenue you earn over the lifetime of that relationship will far exceed the dollars you have spent to establish and nurture the relationship.
Shortsighted businesses weigh only the cost to establish the new customer relationship versus the revenue generated from the first transaction. If they spend more than they make, the businesses throw in the towel and say, “That didn’t work.”
Smart businesses know they may have to spend more than they initially earn to establish the customer relationship. But they also know that it’s far less expensive to entice an existing customer than to acquire a new one. Ultimately, it is worthwhile to invest in customer acquisition if you know how to nurture the relationship and maximize relationship value.
This post originally appeared in St. Louis Small Business Monthly for which MarketVolt’s Tom Ruwitch writes a monthly marketing column.