Why brands signalling they're interested in repeat business matters

What keeps the relationship honest, trusting and mutually beneficial is nothing other than the prospect of repetition.

In game theory, this prospect of repetition is known variously as ‘continuation probability’ or ‘w’. Robert Axelrod has poetically referred to it as ‘the shadow of the future’. It is agreed by both game theorists and evolutionary biologists that the prospects for cooperation are far greater when there is a high expectation of repetition than in single-shot games. Clay Shirky has even described social capital as ‘the shadow of the future at a societal scale’. Yet businesses barely consider this at all (in fact procurement, by setting shorter and shorter contract periods, may be unwittingly working to reduce cooperation).

Yet there are, when you think about it, two different approaches to business. There is the ‘tourist restaurant’ approach, where you try to make as much money from people on their single visit. And then there is the ‘local pub’ approach, where you make less money from people on each visit, but you profit more over time by encouraging people to come back. The second type of business is much more likely to yield positive-sum outcomes than the first.

Tourist restaurant or local pub?

One can assume the customer vanishes after today. The other expects to face them again, possibly while they are still annoyed.

That future encounter changes present behaviour more effectively than any paragraph about values. A defect gets described before purchase. A complaint receives a proper resolution. Cancellation remains straightforward because the business can imagine the same person returning voluntarily later.

“We value long-term relationships” says almost nothing. Every company values a long-term relationship when it means repeated revenue and no inconvenience. The revealing moment is when fairness now costs something and exploitation would be difficult to detect.

Repetition does not automatically create decency. Lock-in produces repeated business of a sort, as does making departure exhausting. Accumulated data, incompatible formats and painful switching can keep customers present while destroying cooperation. That is captivity with a retention metric.

The useful distinction is whether both sides expect consequences from the next encounter. Can the customer leave, complain, warn others or decline renewal? Will the people making today’s decision experience any of that response? When consequences disappear into separate functions, the shadow of the future falls on somebody else.

A local pub may still serve a dreadful pint. The difference is that tomorrow’s customer can mention yesterday’s pint to the same face.

Repeat business becomes evidence of trust only when repeating was a meaningful choice. Everything else is merely continued presence, and plenty of terrible arrangements achieve that.