Small businesses spend much of their resources acquiring new customers to spread the word and get to a more significant reach of their goods and services. Although this seems basic, it might be that a potential revenue source for the business is being overlooked.
Additional focus on repeat customers can lead to long-lasting and consistent profits. Several statistics support the profitability of repeat customers and how they can lead to better business promotion.
Here are the top five reasons for your small or midsize business to concentrate on repeat customers:
Repeat Customers Are Easier to Sell To
With limited time and resources, you want to make the most of every dollar and market to the right people, and putting some of it for building a stable and recurring customer spend might be a wise step.
Adobe conducted a study and found that repeat customers are nine times more likely to purchase again. This is dramatic, considering the average conversion rate in digital marketing is between one and three percent.
Centering your attention on first-time shoppers can take more time and money. Therefore, economically, selling to a repeat customer is much more cost-effective.
They are Likely to Spend More Money
Repeat customers have already experienced your product and know what they like. They can make smarter choices when buying again from you.
Repeat customers are, therefore, more valuable. A seasoned customer spent 67 percent more than a new one in a recent study from Bain & Company. By already knowing the product and having a stable relationship with your business, they can do smarter shopping, which often leads to spending more money.
It is More Expensive to Acquire New Customers
Again, the value of time and resources appears. You want to conserve as much of these as possible while churning out a considerable profit. This is where the repeat customer becomes much more efficient.
According to Amy Gallo from Harvard Business Review, a new customer is between five and 25 times more expensive than an existing one. The variation of the cost depends on the industry.
As a small or midsize business owner, you do not have unlimited resources. Focus on what can get you the most money now; build a relationship with repeating customers.
Repeat Customers Spread the Word on Your Business
Marketing is expensive – for any business. If you have a smaller operation, then there may not be any funds in the budget to purchase an ad or hire ambassadors.
The next best thing is to concentrate on your service and word-of-mouth advertising. Happy customers are excellent sources for publication of your messages. Plus, people are more likely to count on their word.
Fixating your attention to new customers feels like it would help promote your business in word-of-mouth advertising. While this seems like a reasonable idea, it may not be the most efficient.
According to Bain & Company, repeat customers refer more people to a business, on average. After ten purchases, a repeat customer referred to an apparel site seven times, compared to the three times after the first purchase.
This word-of-mouth advertising is very profitable, as referred customers spend about 50 percent more. The study applied to online grocery and apparel stores, but this can be applied to other sectors.
Repeat Customers are More Likely to Become Regulars
After experiencing your store, products, or service, returning customers are more likely to come back again and again.
According to Marketing Metrics, only 10% of customers revisit a business after the first visit. However, this number grows as the customer returns. A regular customer, who shops consistently, is 60 to 70 percent more likely to purchase.
To encourage satisfied repeat customers, small and midsize businesses develop loyalty programs, and daily, regular engagement with their regular customers. You can add a personal touch by sharing relevant news and information or personalizing the rewards they get to their events, like birthdays and anniversaries.
Overall, though, the essential quality to have while encouraging repeat customers is over-the-top customer service.
Happy customers are more likely to come back, spend more money, and promote your business.
To conclude, repeat customers are cheaper to sell to, and they may even be more fun to interact with, seeing as they already have a pleasant experience with you and your business.