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Why are repeat customers more valuable than new ones?

Asked 5 months ago

I've done a lot of reading on customer behavior, extending customer lifetime values, and running loyalty programs. However, I still don't quite understand why returning customers are considered more valuable than new ones? Surely they're equal because both buy from your store?

Fredrick Fox

Monday, July 04, 2022

Repeat customers are more profitable than existing customers the probability of selling to a repeat customer is 60-70% compared to new customers which are 5-20%. Existing customers contribute to about 65% of your sales and they’ll spend about 31% more than the new customers. So, it’s more profitable and cost-effective for a repeat customer to make a repeat purchase than persuading a new customer.

Abeeha Qasmi

Thursday, July 21, 2022

Indeed, both new and returning customers are valuable assets for your business. However, a repeat customer is way more valuable to your business. In support of this claim, here are a few reasons why businesses value returning customers more (as they should) than new ones:

  • More Likely To Prefer You Over Competitors: Repeat customers are your loyal customers. Loyal customers will prefer your brand even if you and your competitor sell the same product for almost the same price.
  • Better Conversion Rates: According to Paul Ferris, author of Marketing Metrics, loyal customers give a 60-70% conversion rate. That is 9 times more than the new customers.
  • Free Marketing: Loyal customers boost your brand awareness through good word of mouth, bringing more business your way.

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