Are Repeat Customers Truly More Beneficial for Your Business?
What would your plan of action be if you realized your company wasn’t making enough money and needed a strategic change? Most of the time and money spent on marketing by many business owners is devoted to finding new consumers in order to boost sales. While gaining new clients is critical, concentrating your marketing efforts on client retention can be more profitable. These returning consumers are typically devoted clients who become more valuable to your company with each purchase.
Not yet persuaded? Check out these six benefits of repeat customers for your business.
Customers who return spend more money
According to the small company survey results examined by BIA/Kelsey, more than half of their yearly sales came from returning clients. Additionally, it was discovered that repeat clients spend 67% more than new ones.
A customer’s potential lifetime value increases the more times you are successful in persuading them to make more purchases. In order to increase profitability, you can entice new clients to return by offering them fantastic bargains.
Additionally, compared to new consumers, the average order value of recurring customers is larger the more frequently they convert. This is largely because repeat customers tend to make more purchases over time due to the development of brand trust, making them invaluable for business success.
New customers spend only 17% more per transaction over the holiday season, while returning consumers spend 25% more. First-time customers “pay around 17% more per transaction during the peak season,” according to Adobe. Although this is fantastic news, recurring consumers spend 25% more on each transaction. That’s not all, though!
It has been demonstrated that even during a recession, the percentage of revenue from returning customers increases. For instance, studies have shown that revenue generation from recurring customers increased during Europe’s recession. This demonstrates that even in difficult economic times, your repeat clients will remain devoted.
Recurring clients are simpler to sell to
All business owners want to attract more clients. However, keep in mind that there is only a 13% probability of turning prospects into paying customers while you are marketing to them. Paul B. Brown, a best-selling author, wrote an essay in Forbes that claims selling goods and services to repeat customers is much simpler than marketing to potential customers.
Avoid wasting too much time and money on potential clients who might not wind up making a purchase. Make sure you are focusing enough attention on and making attempts to retain your current customers. Existing clients are simpler to convert to repeat customers because of the established relationship that you have with them. At least 60% to 70% of clients will buy from you again. This is fantastic news for businesses since they benefit by keeping as many repeat clients as possible.
Additionally, cross-selling to loyal clients is significantly simpler and doesn’t require as much marketing money. Email newsletters, WhatsApp messages, and other methods are just a few of the techniques to market and track marketing efforts.
You spend more on new clients
Finding new clients is more expensive and has fewer benefits than keeping your current ones. Research shows that acquiring a new customer is five times more expensive than retaining an existing one. Additionally, it costs 16 times more to get a new consumer to spend at the same level as a recurring customer.
Your business is promoted by loyal customers
Campaigns for marketing can be very expensive. Getting a brand ambassador to promote your goods can cost considerably more. What happens, though, if you have brand ambassadors you didn’t have to pay? Who better to advertise your goods or services than happy clients who can speak from experience? Satisfied customers will promote your goods and services for free or very little expense.
Never undervalue the influence of word-of-mouth recommendations. Repeat customers can promote your products and bring in new clients at a lower cost. According to a study by The Bain & Company, compared to one-time consumers, recurring customers refer to 50% more potential customers.
In numerous industries, consumers will refer a brand to more new customers the more times they return to make a purchase. The money earned by that brand also rises as a result of these additional clients. You can build a following of devoted customers who will gladly shout your company’s praises by stepping up your marketing efforts among current clients.
Businesses depend on retaining customers
Repeat business is a crucial source of financial support for your company. The most immediate opportunity to enhance your revenue at inexpensive sales costs is from your current clients. Additionally, they are more likely to recommend your business, spend more money, and develop lasting connections with your brand.
What To Do Next
Implementing loyalty programs can make a significant difference in whether your organization succeeds or fails. Just a 5% improvement in client retention can boost profitability by 75%. Businesses that embrace client loyalty will ultimately outperform their rivals in terms of profitability.