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5 Facts that Prove Repeat Customers are Better than New Customers

October 8, 2018

We hear all the time that wineries want more customers. They want more people to come to their cellar door, they want more people buying from their website and they want more people joining their wine club

It makes sense. Tasked with growing sales and profits, most business owners immediately think that finding new people to buy your products is the answer. As a winery, if you get new people to your cellar door, to your website or to join your wine club, your problems will be solved right?

But the reality is finding new customers is hard and not all customers are created equal. In fact, the reality is that the most important customers are the ones who have already bought from you. After all, they’ve expressed an interest in your product, already given you their money and they’re likely to again.

So why should you focus your time and energy on repeat customers? Here are our top five facts that prove repeat customers are better than new customers.

Fact: New customers cost more

Studies have found that it costs up to ten times as much to get a new customer as it does to keep an old one. That should be compelling enough, but it’s also not the full story.

To find new customers, you need to engage in marketing of some kind but you simply have a lower chance of selling to a new customer. In fact, you only have a 13% chance of persuading a prospective customer to actually make a purchase. However, when you market to your existing customers, the likelihood of them making a purchase jumps up to nearly 70%.

And it doesn’t stop there. Even if you do manage to secure a new customer, it costs 16 times more to bring that new customer up to the spending level of your existing ones.

When you look at it that way, it’s clear where your limited marketing budget should go, right?

Fact: Repeat customers help to grow your business more effectively

We live in a world where word of mouth marketing is one of the most effective ways to get your brand out there and many businesses focus on driving positive engagement through it. We think this is especially true in the case of wine, where the decision is often a personal one and can be hard to make without knowledge or guidance.

But what does this have to do with repeat customers?

While any customer can become a brand ambassador at any point in their relationship with you, it’s been found that repeat customers refer a massive 50% more people than someone who purchases just once. Throw in that referral customers tend to have larger orders and it’s clear how important repeat customers can be in driving not only brand awareness, but profit and new customer acquisition too.

Fact: Repeat customers spend more

Logically, this makes sense right? By definition, a repeat customer is someone who has ordered more than once and ordering more than once means there’s a strong chance they will have spent more money with you.

This is true, but many wineries don’t know how significant this can be for their business. A recent Bain & Co. study revealed exactly how much more customers are spending with each repeat purchase. They found that for on average, a customer's fifth purchase was 40% larger than their first purchase and their 10th purchase was a whole 80% larger than their first order. Let’s turn that into dollars. Their first order was a case at wine for $360. Their fifth order was worth $504. Their 10th order was $648. It would take at least two new customers to make the same profit, even before you take into account the increased costs in selling to them.

Just as importantly, this increased order size also occurs for long term customers. The same study found that after shopping with a company for 30 months customers purchase on average 67% more per order than they do on their initial order.

Fact: Repeat customers drive more profit

Again, this is not simply due to the number or size of orders a repeat customer makes. Instead repeat customers are increasingly more likely to order from you. Once a customer has made three purchases with you, they are 54% more likely to purchase again compared to someone who has only purchased once. The more times you can get a customer to purchase from you, the more likely they are to have a significant impact on your winery’s profits (after all, isn’t this why your wine club is so important?)

Studies have also found that up to 40% of a company’s profit comes from its repeat customers and more importantly, that companies with 40% repeat customers generated nearly 50% more income than those with only 10% repeat customers.

And one final statistic if you’re not convinced that repeat customers drive greater profits for your winery? Your top 1% of customers (ie your most loyal and repeat customers) spend 5 times more than the remaining 99%. Convinced?

Fact: They help you understand your business

Now for a point that doesn’t rely on maths and statistics. Hopefully by now you’ve accepted the dollar value of repeat customers, but there is one last thing they can offer that should be pointed out.

Getting to know your repeat customers has huge benefits for your winery. Understanding your demographics and types of customers can help reveal what’s making them buy from you not your competitors as well as what’s working in your business. They can help show the type of wine that sells best and when, the kind of marketing messages that resonate and can even give you a unique understanding of what makes you different.

And why is that important? Because this knowledge allows you to do more of what turned these people into repeat customers in the first place. It allows you to develop a sales and marketing strategy that your customers connect with and gives you the best possible chance to turn all of those new customers you find into even more valuable repeat customers.

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