Why Are Repeat Customers Important?

Repeat customers are 5 times more likely to buy than new customers and spend 67% more. That’s the value they bring to your business.

These are the customers who come back to buy from you after the first purchase. They bring in steady income and word-of-mouth marketing for the long-term growth of your business.

Think of a small coffee shop. A customer walks in for the first time, loves the coffee, and leaves a review online. That’s good – but even better is the regular who comes in every day, orders their usual, and brings a friend or two on weekends!

This loyal customer not only spends more over time but also spreads the word about your business. Repeat customers give you consistent support.

Knowing why repeat customers are important in marketing helps businesses focus on keeping loyal clients who not only spend more but also spread the word about your brand.

Why Are Repeat Customers Important?

Repeat customers are the backbone of any business. They come back not just because they like what you offer but because they trust your brand. Building relationships with these customers means steady growth, saves you time and money, and turns them into loyal advocates who help spread the word.

More Revenue

Repeat customers can bring significant cost savings. Since these customers already trust your brand, they are more likely to come back and buy more. This loyalty not only increases your sales, but also gives you a more stable revenue stream.

Acquiring new customers can be expensive, as costs can be up to 5 times higher than retaining existing ones. By focusing on repeat customers, you can save on marketing and acquisition costs while still maintaining a steady flow of income. For example, a 5% increase in customer retention can lead to a profit boost of 25% to 95%, according to Bain & Company.

Investing in customer retention strategies like loyalty programs, personalized offers, and excellent customer service can help you grow your repeat customer base and increase your bottom line.

Amazon is a great example of benefiting from repeat customers through its Amazon Prime membership. Prime members enjoy perks like free shipping and exclusive deals, which keep them coming back.

As a result, Prime members spend about twice as much on Amazon compared to non-members. This shows how offering extra value can encourage repeat business and boost revenue.

Cost Savings

Focusing on repeat customers is more cost effective than constantly acquiring new ones. Marketing to existing customers costs less because they already know your brand and need less persuasion to buy again.

This is because of lower marketing, advertising and promotional costs compared to the higher costs of reaching and converting new customers.

Apple is another example of a company that reduced marketing spend by focusing on repeat customers. Apple’s strategy is its system which encourages users to remain within the Apple ecosystem by integrating services like iCloud, Apple Music and the App Store.

By leveraging its loyal customer base, Apple doesn’t need to do extensive advertising and promotions to attract new users.

Instead, it invests in enhancing the experience for existing customers which encourages repeat purchases and upgrades. Focusing on nurturing a loyal customer base helps Apple save on marketing costs and drive consistent revenue through repeat business and cross selling of its products and services.

Higher Lifetime Value

Customer Lifetime Value (CLV) is the amount of revenue a customer will bring in over their entire lifetime with you. It’s important because it helps you figure out how much you can spend on attracting and retaining customers.

When CLV is high, it means your customers are really valuable which means more profit. Knowing CLV allows you to personalize your marketing and service to keep customers happy and coming back for more. Plus, it helps you use your resources wisely and focus on the customers who will generate the most revenue over time.

To calculate Customer Lifetime Value (CLV):

• Average Purchase Value: Find the average amount spent each time a customer buys from you.

Formula: Total Revenue / Number of Purchases

• Average Purchase Frequency: Determine how often a customer makes a purchase in a year.

Formula: Number of Purchases / Number of Customers

• Customer Value: Multiply the average purchase value by the average purchase frequency.

Formula: Average Purchase Value × Average Purchase Frequency

• Average Customer Lifespan: Find out how long a customer stays with your business.

Formula: Total Customer Lifespan / Number of Customers

• CLV Calculation: Multiply the customer value by the average customer lifespan.

Formula: Customer Value × Average Customer Lifespan

Example: If a customer spends $50 per purchase, buys 4 times a year, and stays for 3 years, then:

• Customer Value = $50 × 4 = $200
• CLV = $200 × 3 = $600

So, the CLV is $600.

Customer Lifetime Value (CLV) greatly impacts business profitability by helping companies understand how much revenue they can expect from a customer over their entire relationship. Knowing this allows businesses to make informed decisions about how much to invest in acquiring new customers and retaining existing ones.

It’s Impact on Profitability:

• Smart Spending: Knowing CLV lets you determine how much to invest in new customer acquisition.
• Better Retention: Investing in great customer service and experience can keep people coming back longer, increasing their lifetime value.
• Informed Strategy: CLV helps you plan better and focus on the most profitable customer groups.

To illustrate the impact of focusing on Customer Lifetime Value (CLV) and repeat customers, let’s look at a real-world example.

Starbucks uses its rewards program to keep customers coming back for more. By offering perks and personalized offers, they encourage people to visit more often and spend a bit more each time. This approach not only makes each customer more valuable but also creates a stronger connection between Starbucks and its customers, turning occasional visitors into loyal fans.

Brand Loyalty and Advocacy

This is the strong positive bond customers develop with a brand and as a result prefer and buy from that brand over competitors.

Loyal customers not only stick with your brand but also advocate for it, recommend it to others and influence new customers.

This advocacy is powerful because it comes from a place of genuine satisfaction and trust which can influence others’ buying decisions.

For example:

Apple has a loyal customer base. Apple users become brand advocates, recommend Apple products to friends and family and even defend the brand against competitors.

Nike leverages its loyal customers who not only buy from them regularly but also promote them through social media and word of mouth, increasing the brand’s reputation and reach.

In short, brand loyalty creates a community of customers who not only stay with the brand but also share their positive experiences with others, driving valuable and organic growth for the business.

Feedback and Improvement

Feedback is a compass for businesses, it guides them to improve and evolve. When companies listen to what customers are saying, they get valuable insights into what’s working and what’s not.

For example, a restaurant might adjust its menu based on customer reviews, improve dishes that didn’t quite hit the mark and enhance the favorites. Or a tech company might use customer feedback to fix software bugs and add requested features to make the product more enjoyable to use.

Acting on feedback helps businesses stay connected with their customers needs and leads to happier more loyal customers.

🤓Read the article: Customer Feedback: Why It's Important and How to Collect It

How Do You Increase Repeat Customers?

To increase repeat customers, focus on delivering great experiences that keep them coming back. Offer personalized customer service, loyalty programs, and rewards that make them feel valued.

Stay connected through email or social media and keep them updated with new products or promotions. Customer satisfaction and addressing issues quickly can also build trust and long term loyalty.

💡When comparing repeat customers versus new customers, it’s clear that repeat customers offer more value through loyalty and lower acquisition costs.

Offer Incentives Through Giveaways

Offering incentives through giveaways is a fun and effective way to connect with your audience. Hosting contests on social media platforms like Instagram or Facebook can really get people excited.

When participants follow your account, share posts or tag friends they help spread the word and increase your brand’s visibility!

Want to take your giveaways to the next level? Try UpViral.

UpViral allows businesses to run viral contests in any niche by encouraging users to enter their details for a chance to win a prize, as seen in the screenshot for a book giveaway.

Participants provide their name and email, agree to the terms, and are entered into the contest. The platform amplifies participation by allowing users to share the contest with others, which increases their chances of winning through referrals.

This creates a viral effect, expanding the contest's reach as more people are invited to join.

Engage Through Email Marketing

Email marketing is a great way to keep your audience engaged and informed. By sending updates on new products, special promotions and content that matches their interests — you keep your brand top of mind.

Segmenting your audience makes your emails more engaging and effective. And more importantly, integrating with UpViral can boost your email campaigns and drive more engagement and growth.

Create a Positive Experience

Creating a positive experience starts with making sure your website is easy to use and mobile friendly.

Simplify the checkout process to make buying as seamless as possible.

Act on customer feedback regularly to address issues and improve your offerings. This will build satisfaction and loyalty and lead to repeat business and word of mouth.

Conclusion

Hopefully, this article has helped you appreciate the importance of repeat customers and how they impact business growth.

Loyal customers are a steady revenue stream and retaining them is way cheaper than acquiring new ones. Offer personalized experiences, engage through email marketing, and run creative giveaways so you can build stronger relationships with them.

Consider UpViral to take your customer engagement to the next level. It’s a great tool to run viral contests, boost referrals and grow your audience – and ultimately long-term success for your brand. 🙌🏼