We all do a million things to try and grow our business, but have you ever stopped to think about the true value of some of your best customers?
As marketers, we often focus most of our attention on new customers and their acquisition costs while overlooking the needs and value of returning customers, the very people who will help us really build profits.
We’re always looking for ways to help marketers and merchants grow their customer base and their business whether it’s through infographics or blog posts on how to increase conversion rates. For this study, we did extensive research of user base to create an informative infographic on long term value customers. Repeat customers are the foundation on which profitable businesses are built. Successful businesses such as Amazon have a steady base of returning customers to grow their revenue and they do this by implementing techniques like free shipping on orders of $25 or more to get customers to spend more and keep them coming back.
According to our analysis, 25% to 40% of the total revenues of the most stable businesses in the SumAll network come from returning customers. Even better, steady customers help businesses weather lean economic times; businesses with 40% repeat customers generated nearly 50% more revenue than similar businesses with only a 10% repeat customers. To learn more about the lifetime value of customers and what you can do increase repeat buys, check out our infographic below.
To Promote Repeat Business, use these 3 key findings:
Encourage High Initial Purchase. There’s a direct relationship between how much a customer spends on their first purchase and the likelihood of repeat business. Those spending the most on first time purchases were almost twice as likely to return as those spending the least. For this reason, promotions geared for new customers are a great way to turn one-time buyers into lifelong customers.
Push For The Second Sale. Customers who buy once have a 27% chance of making a second purchase. If you can encourage that second sale, however, you’re increasingly likely to create a longtime fan. By the time someone has bought from you a fourth time, you’ve nearly tripled the chance they’ll return again.
Devote a quarter of the Marketing Budget to Returning Customers. Our analysis shows that this percentage will provide the best chance to create steady purchases. Develop your core base of returning customers through more elite and personalized attention; phone calls, gifts, VIP designations, exclusive events, free shipping and various purchase incentives will make your best customers feel special and give them additional reasons to buy.
To see who your returning customers are and where they are coming from, sign up for an account with SumAll today.
Updated November 16, 2017.