The engagement threshold: transforming one-time customers into repeat business

Are you focused on new sales or bringing in loyal, repeat customers?

Whenever a business is completely dependent on new customers, it’s vulnerable. Not only are customer acquisition costs high, but new customers are just as likely to turn to any new competitor that enters the market.

The better a company is at turning one-time customers into repeat business, the more successful they will be in the long-term. Many startups already understand this, but aren’t quite sure how to make it happen.

For most businesses, there’s often a single point in the customer engagement lifecycle where there’s a higher likelihood that a one-off purchase will turn into a loyal customer. This is what I call reaching the ‘engagement threshold.’

I was first introduced to the concept of an engagement threshold from eBay years ago. The online marketplace had discovered that a first-time buyer who makes a second purchase in another category within two weeks of their initial purchase is 70-80% likely to become a repeat buyer in the future. As a result, eBay focuses considerable energy to re-activate their first-time buyers within those first two weeks.

Likewise, I once heard that new Twitter users need to follow at least 7-8 relevant people before they end up “adopting” the service. That’s why Twitter’s “Who to Follow” feature actively suggests people/accounts you might want to follow and the service is particularly eager to get new users to follow others.

Every product will have its own version of this threshold point when a one-off user becomes a loyal customer. For enterprise software, it’s the moment where the software becomes so useful that it becomes entrenched in the user’s daily workflow.

It’s crucial for startups to understand where this threshold point is for their business and then focus extensive energy and resources on crafting the right user experience at that point in time to guide users across the threshold. When done right, payback will be rapid and there’s nothing more valuable than a lifetime customer.

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