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How repeat customers help you boost your profits

Repeat customers: woman paying using her credit card

Key takeaways

  • Repeat customers increase your profits because they cost less to sell to, buy more from you, and recommend you to friends and family
  • To encourage repeat customers, make sure their first experience goes well, then stay in touch and incentivize them to buy again
  • Collect customer feedback to improve the customer experience and encourage repeat purchases

If you want to boost the return on your marketing efforts and increase profits, it’s wise to create repeat customers. For starters, it costs more to sell to a new buyer than to a repeat customer—yet so many small business owners spend much of their marketing budgets on customer acquisition. A slight shift in focus to existing customers could help increase profits and maximize your marketing efforts

Learn more about repeat customers and why they’re important to your business. Plus, explore ways to encourage repeat buyers without breaking the bank.

What are repeat customers and why are they valuable?

Attracting new customers is always a good thing, no matter what stage of business you’re in—but how do you turn first-time customers into repeat buyers? Convincing new customers to become returning customers (those who buy from you a second time) and eventually become repeat customers (those who make multiple purchases) can result in loyalty that substantially boosts profits.

What repeat customers can do for your business

Having a strong base of loyal customers can benefit your business in multiple ways:

  • Since it costs more to attract a new customer than it does to sell to an existing customer, fostering relationships with current customers to turn them into repeat customers can be invaluable to your business (particularly for small businesses with limited marketing budgets).
  • Once you’ve attracted a potential new customer, they’re more likely to buy from you again. Repeat customers have a 60-70% chance of making another purchase on a future visit, and return customers have a 54% chance of buying after a second visit.
  • The longer returning customers have been buying from you, the more likely they are to shop at your store and spend more per transaction. In fact, a returning customer spends three times more than a first time buyer, and a loyal customer spends five times more.
  • Customers who have had a good experience with you previously are far more likely to buy new products that you release. They’re also more open to potential cross-selling and upselling initiatives because they already see the value of your business.
  • 36.5% of shoppers will spend more on products if they’re loyal to a brand.
  • Loyal customers are more likely to recommend you to friends, family, and online communities. This word-of-mouth marketing generates referral business—without any effort on your part—and customers referred by a friend convert five times faster than other first time shoppers.

With the right strategy in place, earning repeat business and increasing customer retention rates can significantly boost your profits.

How to turn existing customers into repeat customers

Repeat customers: person buying organic vegetables

How you make first-time buyers feel during their first purchase can considerably impact their chances of returning. If they become frustrated during their customer journey, they might choose a competitor next time they need your goods or services.

On the other hand, if shoppers have an experience that makes them feel considered, valued, and appreciated, you’re more likely to develop loyal customers who trust you. That trust can increase their desire to make a repeat purchase from your brick-and-mortar store or e-commerce business in the future.

Let’s look at some simple customer retention strategies to encourage your current customers to keep coming back.

Make sure your e-commerce site is functional and appealing

Having a seamless shopping experience is crucial to building a positive customer experience. Whether you’re building your own e-commerce store or relying on templates from a content management system like WordPress, choose a clean design that guides shoppers easily through the buying process.

Ensure customers can find what they need, including comprehensive product or service descriptions and high-quality photos that will entice them to buy. When they’re ready to check out, provide a few secure payment methods, like credit card and PayPal options.

Tip: To help potential first-time buyers find your shop, make sure you’re using effective SEO strategies.

Offer great service at every stage of the customer journey

Woman happily paying online using her credit card

Customer satisfaction is key. In fact, 40% of customers stop doing business with companies that provide poor customer service.

When you offer a great customer experience through the purchase process and beyond, your customers feel cared for. Start with adding plenty of helpful info on your website, including answers to frequently asked questions, a clear return policy, detailed delivery costs and expected times, and easily accessible contact details.

You’ll also need a well-trained customer support team that responds quickly and efficiently to queries via phone, email, or live chat. They should be experts on your products and processes, excellent at dealing with people, and truly care about the service they provide. 

Then make sure to correctly deliver orders on time and with care. Aim to underpromise and overdeliver at every step so you’re always surprising and delighting your customers.

Stay in touch and top of mind

There are many competing businesses out there for customers to choose from. In order to remain top of mind, you’ll need to connect with your customers regularly. That means collecting their contact details, especially email addresses.

To encourage people to share their contact details, consider offering an incentive like a small discount. Or you might create a list of useful hints and tips that help customers choose the right product or service. For example, if you run a flower shop, that could be a list of flowers, their traditional meanings, and which to send for a funeral, birthday, anniversary, or birth of a child. If the customer signs up for your mailing list, they’ll get the list as a free gift. 

Once you have customer data, take advantage of the power of email marketing campaigns to stay in touch while being conscientious of how frequently you reach out. For example, when your customer buys something, send an order receipt, thanking them for their purchase. For online orders, you can send an email to let them know when their delivery is on the way and ask for feedback on their experience.

When designing your marketing strategy, create consistent, personalized communication that makes customers feel like hearing from your business is valuable and positive. For example, you might send out a short newsletter every Wednesday, addressed directly to them, or post regularly on your social media platforms about new products, upcoming sales, or helpful tips. Make sure that whatever you offer adds value to your customers’ lives, and always include an unsubscribe option in emails.

Offer a customer loyalty program to keep them coming back

Research shows that 69% of customers are more likely to do business with brands that offer loyalty programs. 

Customer rewards programs come in many different forms, but they’re all aimed at helping your customers feel seen and appreciated—while also providing incentives for them to buy more, including:

  • Offering loyalty points with every purchase. Once they reach a certain amount, reward them with a coupon or freebie.
  • Giving loyal customers early access to new products or offering them rewards like special deals, discounts, service upgrades, or free shipping.
  • Rewarding happy customers who refer their friends to you, either as part of your normal loyalty program or as a separate referral program.

Whichever option you choose to reward your customers, you’re likely to increase your sales.  

Ask for customer feedback, then act on it

Customers love to feel that their input is considered, as it makes them feel heard and valued. Customer feedback can be incredibly helpful in identifying problems and suggesting improvements to your products or services.

To gather feedback, consider sending an email after every transaction to ask if they’re happy with their new purchase. You can also send out an occasional survey to your email list. Keep in mind that when customers have great experiences, they’re more likely to be inspired to tell others about it.

When you add or claim your Yelp Business Page, you’ll be able to respond to customer reviews, thanking them for their time and business or acknowledging improvements to be made. Engaging with customers who share online reviews can help build your online reputation and encourage new and existing customers to visit your shop.

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Track whether your customers are coming back

If your goal is to increase your customer retention rate, you’ll want to track that by keeping an eye on the metrics.

You could keep a spreadsheet, but as your business grows, you’ll probably need a more efficient and less manual tool. A good customer relationship management (CRM) program, like Hubspot, Freshsales, or Salesflare, can help you keep track of customer contact details, what they buy, and how often.

You can then gain valuable insights, such as:

  • Repeat purchase rate: Number of customers who came back to buy from you again
  • Churn rate: Number of customers who stopped doing business with you
  • Average order value: Average amount each customer spends with you per purchase
  • Lifetime value: Total revenue per individual customer

You can use this information to understand your customers’ experiences and fine-tune your retention strategy to help your repeat customers add maximum value to your business.

Repeat customers help you build your business

Repeat customers offer many benefits, including regular purchases (often buying more and paying more), free word-of-mouth advertising, and higher lifetime values.

Fostering repeat customers starts with ensuring first-time customers have a great experience from beginning to end. Staying in touch via email and social media, offering loyalty and referral programs, and listening to feedback can go a long way in creating loyalty. You can also hone your retention strategy by tracking your customer metrics and seeing how your customer experience affects purchase behaviors.

To attract more customers and grow your business further, discover 11 growth strategies for small businesses.

The information above is provided for educational and informational purposes only. It is not intended to be a substitute for professional advice and may not be suitable for your circumstances. Unless stated otherwise, references to third-party links, services, or products do not constitute endorsement by Yelp.