Returning Customer | 4 mins read

Why Returning Customers are Just as Important as New Business

why returning customers are just as important as new business
Mary Kate Morrow

By Mary Kate Morrow


It costs 16 times more to get a new customer to the spending level of a returning customer and costs 5 times more to acquire a new customer than to retain an existing customer.

Why are Returning Customers Important?

Businesses commonly assume that acquiring new customers is the most important objective to focus on in order to increase revenue. However, research shows that returning customers are just as, if not more, important to focus on than acquiring new customers.

Returning customers have higher customer loyalty than new customers and are a crucial part of your customer base whether you are a small business or large corporation. The most successful businesses are built around a solid customer base that encourages every customer to come back and purchase more products or services.

Repeat customers in all transactions spend an average of 300% more than new customers do. As a result, most large businesses gain the majority of their profits from a repeat customer pool.

In fact, 80% of future profits for businesses are estimated to come from just 20% of current customers. Customer loyalty from repeat customers is a safety net of purchasing power for instances when your small business is financially struggling.

Convincing a new customer to make a purchase can take up to twelve touches. In fact, only 13% of prospective customers will actually make a purchase. Alternatively, a repeat customer has a 60-70% chance of buying from your business again.

Companies spend a lot of money on email marketing and customer retention strategies. Customer retention is a foundation of any successful business as studies show that increasing customer retention by just 5% can boost profitability by 75% on average.

Instead of investing heavily in email marketing, you can use your customer base as a free marketing tool. Existing customers are a very effective way to bring in new customers as they refer 50% more people than one time buyers.

With increased technological advances, customers now do a lot of shopping through online stores. Customer service on your online store is crucial to keep customers returning to your business and keep customer engagement levels high for new customers.

While new customers to your online store or small business storefront need to be impressed within seconds, a returning customer has a knowledge base about your product and customer service already formed. Returning visitors on average spend double the time on an online store than new visitors do.

A returning customer is familiar with business and requires less customer service and engagement. However, it is important to consistently provide great customer service and make customers feel valued no matter how long they have been doing business with your company.

How to Increase the Number of Returning Customers

how to increase the number of returning customers 1598512797 3676

In order to keep existing customers coming back to your business, you must create the best customer experience possible. Leading tips for increasing the number of customers returning to your business include-

1. Customer service optimization- Customer service is a component of the customer experience that can help make customers feel valued and loyal to your business. Make sure to align business operations to specific customer wants and needs whenever possible.

2. Create customer loyalty programs- A customer loyalty program is a great way to reward repeat customers and make customers feel like they are important to your business. Small business owners often struggle to implement a loyalty program but there are creative ways to do so ranging from punch cards to loyalty apps.

3. Embrace positive experiences- Your email marketing campaigns should focus on positive customer interactions and experiences to get the attention of prospective customers and remind existing customers why they want to come back.

Consider interviewing loyal customers who have a good knowledge base about your product or services and share them with your customer base. Sharing feedback and testimonials on social media and through email marketing is a great way to bring in new customers and keep existing customers returning.

4. Use social media- Customers want to be able to get ahold of your company with any issues or concerns in a timely matter. Provide live chat options, social media links, a help center link on your online store that is easily accessible. By giving customers resources and consistent customer support your business will increase customer retention levels long term.

5. Immediately address customer complaints- Always remember that customer loyalty can take years to develop, while a negative customer experience can take seconds to happen. Social media allows for a customer complaint to become a crisis if ignored or not properly handled.

Make sure to respond swiftly to customer concerns, no matter how minor they appear to be. You not only increase the chance of that customer returning to your business, but also show new customers how much you value your existing customer base.