Marketers often focus most of their attention on new clients while overlooking the needs and value of repeat customers. They are always looking for ways to grow their customer base and business. Returning customers are the lifeblood of any successful business. They make the business more robust. Successful businesses like Amazon and eBay rely on repeat customers to grow their revenue. A number of studies have revealed the financial advantages of having repeat customers over having to constantly attract new customers. Let’s now look at the benefits of returning customers and how this leads to increased profitability.
Less costly
Finding new customers can be rewarding, but it often involves lots of hard work and expenses. Think about this. When you attract a new client, you have to spend a lot of time convincing them that you are trustworthy. That means endless phone calls, visits, and emails. By the time they have purchased from you, you’ve spent a significant amount of your profits getting the business. But when it comes to returning customers, the equation is different. The costs associated with repeat customers are significantly lower. They buy something they know you sell, and since they have transacted with you before, they trust you.
More purchases
By definition, a repeat client is a website visitor who has made more than one purchase. A repeat customer is more likely to shop with you again. According to research, a customer has a 27% chance of buying from you again after one purchase. But if you can woo that customer to make a second purchase, they have 54% chances of making yet another purchase. The more times the customer visits your store, the higher your chances of winning them for good. Encourage them to come back again and again. This can be a valuable tool in engendering robust, long-term, and profitable relationships.
Easier to sell to
If your customers are new, it means you are spending more money trying to convince them to shop from you, and this is eating into your profits. It is easier and less costly to sell to existing clients than it is to sell to new customers. There are a ton of reasons for this, but mostly it boils down to trust. When you have sold something to someone in the past, you have built trust. They give you cash, and you offer them what they need. They are likely to buy from you again and again since your products, customer service, payment system, and shipping have lived up to your promise.
Less-price sensitive
A majority of business owners assume that today’s shoppers are bargain hunters and will switch services for even a slight drop in prices. While this is true in the case of a new customer, once a client has had a few positive shopping experiences with you, they are less likely to be sensitive about prices or pricing fluctuations. They trust your brand and they will go out of their way to purchase from you irrespective of price change. Of course, you should be careful not to overprice your product, but your repeat clients are willing to pay more for your product/services if it means sticking with you.
Brand advocates
There is no such thing as free marketing, but word-of-mouth advertising comes close. When customers have had positive shopping experiences with you, the probability of them spreading the good word about your brand goes up exponentially. Without any effort or expenses from your end, a happy repeat customer will gladly tell their family and friends about how wonderful your product is and how they had a wonderful experience with you. While some industries enjoy higher advocacy levels than others, having a satisfied customer market your brand for free is the best scenario for any business. Studies show that 84% of buyers say they trust recommendations from family and friends over other forms of marketing.
Final Word
Without a doubt, repeat clients will contribute to your bottom line and keep your business going strong. So, don’t just focus your attention on new clients. Keep in mind that your existing customers will contribute to 80% of your business’s future revenue.
