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Building and maintaining your customer base

To build and maintain a customer base for your business, you need to consider how to:

  • attract new customers to your business
  • keep the ones you already have.

Whether your business will attract one-off transactions or have the chance for repeat sales depends on your type of business and the products and services you are offering.

For many businesses, building a customer base from loyal returning customers can provide many advantages, including:

  • increased sales and profits
  • having a more steady and reliable number of sales, especially during low seasons
  • word of mouth and referral business
  • reduced marketing costs
  • feedback from customers who know your business well.

Even if your business relies on one-off transactions, delivering a high level of service to your customers can help your business by bringing referrals through good word of mouth.

Some ways to help you build your customer base include:

  • understanding your customers – think about why they buy from you, instead of buying from your competitor, and whether you are meeting their needs and wants
  • providing good customer service – create a positive experience when they interact with you so they will come back
  • getting feedback from them after the sale is complete – ask if they are happy with their purchase and experience, and how you can improve your service to them
  • giving them rewards to return to your business – such as loyalty programs, or discounts on future purchases
  • providing a unique experience – make your business stand out from your competition by giving your customers an experience they won’t be able to get anywhere else
  • innovate – find ways to improve and grow your business that will keep customers coming back.

Find out more

Learn how to attract and keep loyal customers

Looking after your customers during COVID-19

During these times of COVID-19, it’s still important to make sure you look after your customers so they remain loyal and supportive of your business.

Have a look at our information on looking after your customers during COVID-19.

Providing good customer service

Customer service is how you and your employees interact with customers before, during and after a purchase.

Providing excellent customer service is not only a great way to encourage customers to come back to your business, but also improves your business’s reputation.

Excellent customer service involves:

  • treating your customers with respect
  • considering your customers’ needs and wants
  • knowing your products/services
  • going 'above and beyond' to provide assistance to your customers.

To improve your business’s customer service, consider:

  • training yourself and your staff in communication and sales skills
  • making customer service an important part of your business’s culture
  • making sure you and your staff know your products and services well so you can answer customer enquiries
  • having procedures in place to handle customer complaints in a way that is respectful to the customer
  • responding to customer enquiries and feedback in a timely way
  • keeping your word as a business – if you have promised something (e.g. arriving by a certain time), make sure it’s fulfilled
  • finding ways to make it more convenient for your customers to interact with your business (e.g. telephone services, social media channels etc.).

Find out more

Learn more about the principles of good customer service.

Read about the importance of customer service to the sales process.

Discover ways to keep customers with customer service excellence.

Managing customer complaints

Receiving customer complaints about a product or service your business provides may seem like a bad thing. However, if the complaint is handled correctly, you may be able to use it as an opportunity.

Complaints that are handled well can help you to:

  • retain existing customers
  • prevent negative word of mouth
  • attract new customer referrals to your business.

The impact a complaint has on your business is largely determined by you. When responding to a customer after receiving their complaint, think about how you would like to be treated if you were the one making a complaint to a business. See it as an opportunity to gather valuable feedback about how you can improve your business and customer service.

Did you know?

Only a handful of customers will complain to you. Most customers will just choose not to return to your business.

Making it easier for customers to complain (such as providing anonymous feedback forms, or a dedicated place on your website for feedback) will encourage more people to let you know about their experiences with your business. You can then fix any issues before it becomes a problem for more customers.

Find out more

Get more tips for handling customer complaints.

Read about customer complaint behaviour and how to avoid the spread of negative perceptions about your business from Business Queensland.

Check out helpful information on handling customer complaints:

Loyalty reward programs

A customer loyalty program offers incentives for your customers to return to your business and buy more from you. This can include things such as:

  • providing a reward after customers purchase a certain amount from you (e.g. a free coffee after every ten coffee purchases)
  • allowing customers to earn points or credits with each purchase to go towards a reward or discount (e.g. an airline, cinema or grocery store program where points collected can be used to redeem a reward)
  • giving customers a discount to purchase from your business regularly (e.g. 10% discount for members of the VIP club)
  • providing incentives for customers to refer new customers to you (e.g. a free drink if they bring a friend with them for their next visit)
  • teaming up with another business for mutual benefits when customers purchase from both of you (e.g. offering a discount at the sports clothing store if they attend your yoga classes).

Having a customer loyalty program can help you to:

  • encourage existing customers to come back
  • build a loyal customer base
  • increase your sales
  • attract new customers who may want to use the program
  • increase your brand recognition
  • build your business’s reputation and generate positive word of mouth.

Did you know?

With a more sophisticated type of loyalty program you can also use the information you collect to tailor your marketing and products. If you use a point of sale system that collects data as well you can build useful information about your customers’ buying habits to help you best meet their needs and wants.

However, there are also risks involved with customer loyalty programs, so it’s important that you plan well to avoid them as much as possible before you start. Some common risks include:

  • not being able to fulfil your obligations from the program
  • the program not being effective in attracting return and new customers for your business
  • losing track of customers using the program
  • customers or staff misusing the program, or committing fraud through the program
  • loss of sales and your business reputation if things go wrong.

Pricing your products or services

How you price your products can play a big part in whether customers choose to purchase from your business. Set your prices too high, and customers might not be able to afford purchasing from you, or will go to a competitor selling for less. Set your prices too low and it can affect your profit margins and your brand perception.

When setting prices for your products and services consider:

  • your costs required to provide the product and services – this includes your overheads such as shop rental prices, delivery costs, staff salaries, marketing costs etc.
  • what your customers will be willing to pay – whatever price you set must be something your customers are prepared to pay for your products and services
  • the demand and lifecycle of your product – does your product have a lifecycle? Will its value drop in worth once it’s no longer ‘new’, or future versions are released? Will customers be willing to pay more to get it early? Will you need to lower the price after demand has worn off?
  • what your competitors charge – customers can shop around for what they believe is the ‘best deal’. However, it’s also important to look at the reasons your competitors are charging their prices and not just base your prices on theirs. They may have different manufacturing processes, difference in quality and brand status, different customer service standards etc.
  • GST – don’t forget to include GST into your prices. If you earn over $75,000 a year, you must register for and charge GST. So if you think there’s a chance you will earn over the threshold, it’s a good idea to register for GST and start including GST in your prices from the beginning, so you won’t have to raise your prices later on. See How GST works on the ATO website for more information.

Did you know?

As a business owner, you have certain rights and responsibilities you must meet when it comes to setting and displaying prices.

Find out about pricing and surcharging on the ACCC website, including your rights and responsibilities for:

Price-gouging during COVID-19

In this time of COVID-19, be careful that you are not setting unreasonably inflated prices for your product or service, especially if it’s critical to health or safety. Whilst you are free to set the prices of your products and services as you see fit, Australian Consumer Law does protect consumers from unconscionable conduct where a business’s conduct is too harsh and goes against good conscience.

Find out more

See Getting your pricing strategy right

Read about different pricing strategies

Look at the small business expected income benchmarks on the ATO website to see what others are charging for similar products and services to yours.

Guarantees, warranties and refunds

As a business, it’s important that you know about your customers' rights and your legal obligations for guarantees, warranties and refunds.

The Australian Consumer Law (ACL) sets out the rules for dealing with customers. The ACL is a national, generic law which applies to all sectors in all Australia states. This means that all consumers in Australia enjoy the same rights and all businesses have the same obligations.

Every Australian state and territory has a fair trading regulator that administers and enforces Australian Consumer Law (ACL).

Consumer guarantees for goods and services

Consumer guarantees are a set of rules you are required to comply with for the products and services you sell in your business. Consumer guarantees require you to make sure that the products and services you sell are safe, do what you say they do, and are of acceptable quality, among other requirements.

The Australian Competition and Consumer Commission (ACCC) website lists  the consumer guarantees you need to provide for goods and services, including guarantees required of manufacturers and importers.

If a product or service that you’ve sold doesn’t meet one or more of the consumer guarantees, you are required to provide either:

  • a repair, replacement or refund
  • cancellation of a service
  • a further service to rectify the problem, or
  • compensation for any loss as a consequence of your product or service – depending on the circumstances.

Did you know?

While you are required to meet your obligations and provide consumer guarantees, you are not required to provide a remedy for your product and service unless one of the guarantees has not been met.

For example, you may not be required to provide a remedy if a consumer:

  • simply changes their mind, decides they do not like the purchase or has no use for it
  • discovers they can buy the goods or services more cheaply elsewhere
  • has damaged the goods by using them in a way that was unreasonable.

However, you can still consider doing it to provide good will for your business and brand.

Find out more

Watch videos from the ACCC to help understand how consumer law affects your business.

Learn more about your customers' consumer guarantees.

Providing other warranties to customers

While your business is required to automatically provide consumer guarantees when you sell goods or services, you can choose to offer other warranties as a part of your customer service. Examples of warranties you may want to provide as an option or for an extra fee include:

  • express warranties – a promise to fulfil certain obligations for your goods and services e.g. you will replace a product if it has a defect within a two year period with a brand new one
  • warranties against defects (or manufacturer's warranties) – a promise to fix any defects that appear in your product up to a certain time period e.g. you will provide free repair services for any product defects up to two years after purchase
  • extended warranties – an extension of a warranty beyond the expected life of a product e.g. if the televisions you sell are reasonably expected to last three years, you can provide an extra two year warranty to fix or replace the television if it breaks after the expected three years.

Extra warranties that you offer do not override or limit consumer guarantees. Your customer is still entitled to a repair, replacement or refund if they are covered by a consumer guarantee, even if any voluntary or extended warranties have expired.

Learn more about different types of warranties

Providing refunds to customers

If a product or service that you’ve sold has a major failure (product is unsafe, or unable to be fixed to fulfill its advertised purpose in a reasonable time), you are required to provide a refund, replacement or compensation to the customer. If there is a minor failure (product can be repaired to fulfil its advertised purpose), you have to repair the product, replace the product or refund the customer.

You aren’t however, required to provide a refund if the customer simply changes their mind.

It’s a good idea to have a clear refund policy in place for your business to make it clear to your customers and your staff what you will and won’t refund.

Did you know?

It’s illegal to display signs in your business stating ‘No refunds’, ‘No refund on sale items’ and ‘Exchange or credit notes only’. While you may choose to not offer a refund if the customer changes their mind, you are still required to provide a refund if the product doesn’t meet consumer guarantees.

Read more about refunds and payment from Business Victoria.

Customer cancellations due to COVID-19

If you are receiving cancellations of goods and services from customers due to COVID-19, be mindful that Australian Consumer Law will still apply.

To learn about the rights of customers who have cancelled orders, read the COVID-19 (coronavirus) information for consumers on the ACCC website.

Find out more

Read about consumer rights and obligations

Business Queensland has a small business self-assessment checklist to help you comply with the ACL

Australian Consumer Law (ACL)