Taking a Closer Look at the Value of Returning Customers – Worth More Than You Might Think

It doesn’t matter if you’re in the fashion or jewelry industry; returning customers are simply worth more than new ones. Here are five reasons why you need to focus on your repeat customers.

1. Repeat Customers Are Much Cheaper To Retain

A lot of marketing dollars go towards acquiring new customers, and while finding new customers is important, you can’t neglect your returning ones. After all, a 5% increase in buyer retention can improve a company’s profitability by 75%. Not only that, but reducing your buyer defection rate by 5% can also increase your profitability by 25-125%.

While not all companies focus heavily on retention, 82% of companies do agree that retention is cheaper than acquisition. Stats back this up, as 61% of small to medium-sized businesses report that over half of their revenue comes from repeat customers.

2. Repeat Customers Have a Higher Chance of Returning

Customer loyalty is incredibly important. In fact, it’s so important that loyal customers are worth up to 10 times as much as their first-time purchase. But creating a loyal customer isn’t easy.

Fortunately, it does get easier to maintain this loyalty the more a customer purchases from you.

Based on Smile.io’s research, a customer who purchased from you once has a 27% chance of returning to your store. But, a customer who purchased from you twice has a 49% of returning to buy more, while three purchases increase the chance of them coming back by 62%.

Attracting this kind of loyalty is the hard part, but you can use sustainable marketing tactics to make sure they keep coming back. For example, you can use loyalty programs or personalization. As you start to get to know your customers, you can start sending them discounts or gifts, which include everything from thank-you notes to high-quality plaque awards.

3. Repeat Customers Are Much Easier to Sell To

When you sell to a customer once, you should gain access to their email or phone number. This gives you a direct channel to send them updates or discounts. And considering the average conversion rate in e-commerce is between 1%-3%, you’ll want all the help you can get.

Research conducted by Loyalty 360 found that 75% of US companies that have loyalty programs will generate a positive return on investment. 64% of retailers also state that the loyalty program is the best way to connect with customers and generate more profits.

As a rule, you’ll want to make a loyalty program so that you can put less effort into marketing. And when you also automate your email campaigns, you can spend less time on conversion tactics that aren’t sustainable, such as sending abandoned cart offers or discounts.

4. Repeat Customers Spend More on Items at Key Times

Every e-commerce business knows that holidays are often the most profitable, but did you know that repeat customers are more likely to spend money around Black Friday, Cyber Monday, and Christmas? Based on Smile.io’s research, this increase in demand seems to be the case. 

Not only that, but their research also found that a customer’s average order value seems to increase the longer they’ve been shopping with you. However, this depends on the industry. Vape and regulated goods, jewelry and accessories, beauty and cosmetics, and the health and supplement industries have the most to gain from attracting more repeat customers.

5. Repeat Customers Will Leave if They Aren’t Treated Well

A Rare Consulting survey found that 86% of customers state that loyalty is driven by likability, while 83% say it’s trust. However, 89% of customers will begin doing business with the competitor following one poor experience, even if they were loyal in the past.

Customers know the value of their money and will go elsewhere if they aren’t treated properly. It’s up to businesses to treat their customers with respect and to maintain their loyalty.

This can be done in a few ways, and the best way isn’t to have a monopoly on the market. In fact, if you listen to your customers, apologize when you’re wrong, and take them seriously, you’re already doing more than most companies. To go above and beyond, you must identify and anticipate their needs, suggest solutions, and be available to answer their questions.

You want to gather a healthy stream of feedback to ensure you’re giving your customers what they need. This can be done by asking for reviews or handing out customer surveys.