Many new businesses make the mistake of focusing primarily on winning new customers to grow their client base, often overlooking the value of repeat customers. Given that an average of 65% of a business’s revenue comes from repeat customers, customer retention has become critical to business success and is one of the top priorities for business leaders across all sectors.
There are several different customer types and various levels of customer loyalty. However, when it comes down to it, there are really just two main types of customers you need to be aware of; new customers and repeat customers. While the distinction between the two may seem straightforward, it’s still important to understand the nuances of each type.
A new customer is someone engaging with your business for the first time. They may have been drawn in by your marketing efforts, generally have heard good things about you, or they’re simply unhappy with your competitors and are looking for something better.
Whatever their reason for coming to you, new customers represent a fresh opportunity to impress. Their first experience with your business is make-or-break – it’ll either convince them to come back or send them looking elsewhere.
Repeat customers are those who’ve already made a purchase and have decided to come back for more. They’ve made at least two purchases from your business and, chances are, liked what they saw the first time around. These customers know what to expect from you and trust your products or services enough to choose you over competitors.
Although acquisition is an essential first step in the customer journey, the cost of acquiring new customers can be as much as five times higher than retaining existing ones. Attracting new customers often takes time and significant investment due to the marketing and advertising efforts involved in the process.
On the other hand, retention allows you to focus on the clients who already know your business and want your services. Cross and up-selling is easier and a lot more cost-effective than finding and converting new customers.
Returning customers are often more valuable than new ones because, on average, repeat customers spend 67% more on orders than new customers. They learn to truly know and trust your brand, and once familiar with your business and the quality of your offerings, will purchase more over time. You can also count on them to be a more consistent source of revenue – something as small as a 5% increase in retention can give profits a boost by 25%.
Retention and customer satisfaction go hand in hand. By focusing on client retention, you’ll create a loyal group of customers who will happily sing your praises and promote your business. After all, the more satisfied customers are, the more likely they are to create referrals.
Research has also shown that repeat customers are not only more likely to purchase again, but they also do so more frequently and with higher average order values. Existing customers have a 60-70% chance of buying from you again, compared to just 5-20% for new customers. This increased spending doesn’t just impact your bottom line – it’s a sign of the strong relationship you’ve built with your customers.
Ready to take your customer retention to the next level? Our new CX playbook, “Retaining Customers and How to Unlock Growth,” provides all the answers you need. Read our latest resource and learn more about customer retention today!
Alternatively, as the #1 answering service, Moneypenny understands that retaining customers starts with exceptional service. Our Moneypenny Receptionists are expertly trained to provide your customers with the highest level of care, ensuring every call is answered and no opportunity is ever missed. To learn more about how we can help your business, call us today on 0333 202 1005.
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