Are you focusing your marketing efforts not just on acquiring customers but on the real value of their return buyers? There’s been a lot of discussion about how to engage customers after purchase, but according to new research from SumAll, a marketing analytics company, it takes between three and five years for the average business to create a customer base comprised 25% of return buyers. Are you doing all that you can to cultivate customers into buyers and beyond?

The Value of Repeat Business

SumAll, in an effort to help marketers and merchants grow their customer base and their business, sought to learn more about the lifetime value of customers and what can be done to increase repeat buys. Based on millions of customer transactions from the thousands of businesses using SumAll, the company was able to uncover the true value of repeat business and as a result, identify key elements for creating, developing and retaining customers who buy again and again.

Once a prospective customer becomes a buyer, it’s important for marketers not to overlook or ignore their their needs. In fact, SumAll found that repeat customers are the foundation upon which profitable businesses are built. According to their analysis, 25% to 40% of the total revenues of the most stable businesses in the SumAll network come from returning customers. Furthermore, steady customers will help businesses weather lean economic times; in a recent 12-month period, businesses with a 40% level of repeat customers generated 47% more revenue than similar businesses with only a 10% level of repeat customers.


Learning Opportunities

Marketing for the Second Purchase

To promote repeat business, SumAll recommends the incorporating the following elements into your marketing strategy.

  • Encourage High Initial Purchase. SumAll found that a direct relationship existed between dollar amount for the customer’s first purchase, and the likelihood of repeat business. Those spending the most on a first transaction were nearly 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 loyal 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 patron. According to the research, the time someone has bought from you a fourth time, there’s a 59% chance they’ll return again.
  • Invest 25% of the Marketing Budget On Returning Customers. Analysis shows that this level will provide the best chance to create steady purchases. By developing your core base of returning customers through more elite and personalized attention, including phone calls, gifts, VIP designations, exclusive events, free shipping and various purchase incentives you can help to make your best customers feel special and give them additional reasons to buy.

We always suspected that returning customers played a role in promoting brand loyalty, but by determining the value of a returning customer, marketers can begin to optimize their marketing budgets with focused messaging to the right audience at the right time.