The Gold Is In Repeat Business

By Bob McElwain
Posted Sunday, May 4, 2003

The success of most retail businesses depends upon generating repeat business. This is as true online as offline. You need to attract people who come to know and trust you, who are confident your advice is sound.

A popular hardware store makes a good example. Think of one you favor. Remind yourself of the times you've entered the store, picked up a couple of things, and stepped up to the register without asking a question of anyone. This is gold to the shop owner. Every penny in the markup is pure profit.

In mail order, who beats L.L. Bean? Their product line is broad. The ordering and delivery service is outstanding. And if there's any problem, it will be resolved graciously, and with style.

Making This Work Online

A truth many new to the Web fail to see is that it is no easier to make these models work online than offline. In fact I argue that it is more difficult online.

As an aside, I also remain convinced that to succeed online requires just as much business savvy and hard work as does success offline. The only "saving" in starting a business online is in the accommodations. A dandy website costs pennies compared to leasing or buying an offline store.

Why It Is More Difficult To Succeed On Line

First and foremost is that a website offers virtually no credibility of itself as does an offline shop, in which one can see and feel the goods filling the shelves.

Second, location is a fundamental consideration in opening a shop offline. On the Web, this has no meaning at all. For any website is but a click away from yours. There will be no street traffic to benefit a website. Offline, curious passer byes may be all that's needed to build a very successful business.

The Fundamental Difference Between Online And Offline Shoppers

Depending upon the product one is seeking, shoppers can be divided into two types with very little overlap. The transactional shopper knows exactly what he or she wants, and will look about for the best price. Once a purchase is made, don't expect further business from this customer.

The second type is relational. These people hope their first transaction with you will be the first of many over time. They will delay in making this first purchase until convinced of your credibility and expertise. Once they come to believe you have these characteristics, they will buy. And return to buy again, without requiring further demonstration.

Relational Types And Auto Mechanics

Nearly everyone takes a relational view when seeking a mechanic. We know less about our cars with each passing day. Thus we become ever more dependant upon our mechanic.

Most will begin their search by asking those known to have good sense about such things. A next step might be to ask for a minor repair and see how things go. As soon as possible, however, you'll want to come to trust this fellow, to be able to dump a problem into his lap, confident he'll fix things properly, and treat you fairly in the bargain.

The Mechanic In Your Website

A good hardware store is a great source for business ideas that work. While few even dream of obtaining the success of L.L. Bean, all can benefit from studying the way in which they do business.

A more reasonable, and quite plausible goal, is to establish yourself as the "mechanic" that supports your website. Build credibility and trust as a good mechanic does. Demonstrate to your visitors you know what you are about.

Above all, address all to relational types. It doesn't take much heavy thinking to realize these are the people who can come to trust you, and return repeatedly to buy from you again. Sure, sales to transactional shoppers improve your bottom line, so don't turn these people aside. But it's relational shoppers you must target, for it is from this type you build your customer base.

The Rest Is Just Pieces Of Cake

Well, not really. There's a catch here. And it's a dandy.

Few shoppers online are relational. Most are transactional. Since these people are looking only for the best price, you'll find it tough to impossible to build a customer base from them.

You need relational types. Period. Even though few Web shoppers today are of this type, they must be your target. There is simply no other choice.

Over time, as more web-based businesses that fit the needs of such shoppers become available, more relational types will buy on the Web. It's the trend even now. However, they are not jumping online in droves. And I wouldn't expect them to, particularly since most websites are targeting transactional shoppers only.

Target the relational shopper. Build creditability and trust, demonstrate your expertise, and build repeat business from this target. It is in repeat business the real gold lies.