Repeat Customers = Valuable Customers


After an influx of new customers, you may be tempted to move on and focus all your efforts on additional sales. Resist the impulse. Focusing too much on new customers as opposed to repeat customers can harm your business.

Getting new customers can cost up to 10 times more than keeping and growing with those that you already have. According to Inc. Plus, you’re likely to lose a lot of them if you aren’t making an effort to keep them happy. The average firm loses half of its clients every five years.

Take it from Philip Kotler, who’s known as the Father of Modern Marketing.

“Companies need to pay more attention to serving and satisfying their present customers before they venture in an endless race to find new customers,” he writes in his book “Marketing Insights From A to Z.”

Still not convinced? Here are some reasons why repeat customers are the most valuable for your business.

1. Repeat customers spend more and bring in most of your revenues.

Many companies get as much as 80% of their revenues from clients they worked with the year before, notes Andrew Sobel in “Making Rain: The Secrets of Building Lifelong Client Loyalty.” In fact, raising customer retention rates by just 5% can increase profits by 25% to 95%.

Also, the longer customers shop with a company, the more they tend to spend. According to a study by Bain & Company, veteran retail customers spend nearly 70% more than patrons who are around for six months or fewer. The same spending disparity was seen with grocery shoppers as well, with long-time clients spending 23% more than patrons who’d been shopping at a specific store for fewer than six months.

This is because repeat customers shop more often and complete larger transactions, making them the cornerstone successful businesses rely on.

2. Repeat customers are more likely to purchase different products over time.

The best way to grow your business’ market share, says Kotler, is to find more products and services that can be sold to the same customers. Bain & Company offers the example of Gap Online, where the majority of shoppers say they’d consider buying furniture from the store in addition to clothing.

Cross-selling lets you draw from existing clients, rather than strain for new ones in more expensive marketing schemes. Reaching out to repeat customers can be as easy as sending out a newsletter.

For example, Kelley Briggs, CEO of DesignWorks NY, tells Inc. that she sends one out once a year to remind customers about the services her company offers, and this gets them to subscribe to additional projects.

3. Repeat customers can become promoters and help you acquire new customers at a lower cost.

Once a customer-business relationship is established, customers can do your marketing for you — from giving referrals to their friends and family to introducing you to new clients. As Sobel puts it, faithful clients “multiply influence” of your business at little to no cost to you.

Never underestimate the power of word-of-mouth. The Bain & Company report cited above explains that, across industries, the more shoppers return to a specific store, the more customers they refer to that brand. For example, while a first-time customer of an online retailer refers about three people to that brand, that same customer is more likely to refer seven people by his/her tenth purchase. And those newbies they introduce bring in even more revenue.

The same study found grocery shoppers referred to a store spend a collective 75% more than the original shopper. Even for pricier electronics and apparel, referred customers spend 50% more than the repeat customer who referred them.

4. Repeat customers help you get a better understanding of who buys your products.

Customers in successful loyalty programs help you decode overall buying trends, says Harvard Business School professor Jose Alvarez.

He tells the HBS blog that businesses can use the information gleaned from repeat customers to find out what brands matter to consumers and even negotiate with manufacturers when they want to increase prices on products your customers aren’t loyal to.

“A great retailer is the agent for the customer,” Alvarez adds. “Loyalty programs and the insight and communication capabilities they provide can help retailers achieve greatness in a crowded and commoditized space.”

This brings us to the last point.

5. Repeat customers are the lifeblood that keeps your business running.

In a time where potential customers can pass over your business with a simple mouse click, Sobel notes, current customers have the largest short-term potential to grow businesses’ revenue at low sales costs.

They spend more money, refer more people and likely build meaningful long-term relationships. Executives in the hotel business, for example, call their regulars family.

“Online retailers who succeed in building customer loyalty will ultimately be more profitable than online competitors who focus only on transactional metrics such as number of visitors, number of shoppers, eyeballs, and so forth,” note Bain & Company in their report.

Small changes in loyalty can make the difference between businesses succeeding or failing. Isn’t it time you put those faithful repeat customers first?