Last week, we explored the topic of acquisition costs, discussing their steep rise and the implications of an acquisition-focused strategy.
Ultimately, the costs of acquisition can’t been avoided completely, but the smartest strategy for maximizing their worth is retention. With the cost of acquiring a customer higher than ever, it’s vital to make every penny invested work for you in the long run.
It can cost a brand up to 7x as much to acquire a new customer than to keep an existing one. Meaning returning customers are significantly more valuable than new ones.
In fact, increasing your retention rate by just 5% can increase profits by over 50%, a crystal clear display of the strong impact even small improvements in loyalty can have. The chart below outlines the purchase path of a returning customer, demonstrating that even one repeat purchase by the same customer can help neutralize hefty acquisition costs.
Let’s take a look at the numbers surrounding repeat buyers:
- They’re 65% more likely to buy during their browsing session
- They spend an average of 55% more on every purchase
- They’re 50% more likely to try new products
Plus, they’re happier customers, leading them to be more likely to refer new customers.
Finding new customers is crucial, but turning new customers into loyal buyers is even more important. Customer retention is the name of the game and the better yours is, the more profitable your brand will be.