Five Reasons Why Repeat Customers Are More Valuable Than New Ones

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Many small business owners tend to put a lot of their time, money and energy into acquiring new clients or customers, while overlooking the proverbial goldmine they already own:

Their existing customer base.

Fair enough, in some industries repeat purchases don’t come around often, such as middle class residential real estate, or people who need a specific solution to a specific situation which doesn’t occur often.

For most small businesses out there, however, their existing customer base is likely to be worth a lot more than they realize.

5 Reasons why repeat buyers are more valuable than new ones:

1. Repeat buyers tend to spend more per transaction.

Many business owners lose track of this old bit of marketing wisdom:

The most likely person to buy from you is the one who just bought from you.

Existing customers already trust you and your brand. You have already delivered on their expectations.

As a result, they are more comfortable spending larger amounts of money with you than with someone else they still need to learn to trust.

2. Repeat customers cost less than new ones.

In many industries, especially those with tough competition, marketing costs are sky-high. The cost of acquiring one new client or customer can take a big chunk out of your profit.

However, when it comes to your existing customers, you already paid those costs, or spent the time and effort to acquire them. You have already spent the time to earn their trust.

Acquiring new customers also often require steep discounts or promotional deals which cut into your profits, while keeping existing customers happy requires fewer sacrifices out of your profit.

Fair enough, you may want to reward your existing customers from time to time, to incentivize them to stay, but the cost of that will be nowhere near the cost of acquiring new customers.

3. Repeat customers tend to refer others.

Granted, not every repeat customer or repeat client will refer others to you. But those who do, do you a huge favor:

On the one hand you save all of the time, effort and costs associated with acquiring a new customer.

On the other hand, since people are more likely to trust recommendations from people they already know, your new referred customer comes to you with a measure of trust already established.

Not to mention that referred customers are often of a higher quality than the ones you would have acquired using conventional marketing channels.

4. Repeat buyers help to build stability.

When your marketing campaigns for acquiring new customers struggle to maintain momentum, or you enter periods when new customers are just not that interested in signing up, your existing customer base will provide some stability to your business revenue.

Instead of having to keep chasing the next sale, you can rely on your loyal customers to help your business survive during hard times.

In addition to that, having loyal repeat customers makes planning easier, especially if you want to expand, borrow money or invest in new assets.

5. Loyal customers help to strengthen your brand.

While not every repeat buyer will stand up for you in public, some of them will become brand advocates. These people will share stuff about you on social media, leave reviews online, and some may get involved in discussions when others talk bad about your business.

Their voices and their stories are powerful tools to build trust among the new customers you acquire.

Again, it comes back to people trusting someone else’s recommendations more than they trust you outright – at the start, anyway.

At the end of the day, your loyal customers help you to build your brand – and it carries no marketing costs.

How to retain your existing customers:

a. Find ways to stay in touch. It could be via email, WhatsApp, or a personal note now and then – whatever works for you and your customers.

b. Ensure that your existing customer or clients receive the best service you can give them without hurting your profits.

c. Find a way to reward them for their loyalty. This could mean offering exclusive deals from time to time, offering small perks, or even a loyalty rewards program.

d. Do whatever it takes to make them feel valued, and never let them feel they are just their as a cash cow.

In conclusion:

When you add up all of the above, the value of retaining existing customers is clear.

Take some time and think about your repeat customers, and your loyal customers who refer others and who are brand evangelists.

Try to calculate the value of a repeat customer over the value of a once-off buyer. You will find that there is enough room in your profit to offer better prices or higher valued services to existing customers, and still spend a lot less  than the cost of acquiring a new one.

Fair enough, acquiring new customers is crucial to growth. But if you take care of your existing customers, they will literally help you to grow your brand and your revenue.

Granted, at the start their contribution to your growth will be small compared to your normal customer acquisition campaigns – but it will cost you virtually nothing.