‘Repeat Sales’- The term might sound like business jargon, and knowingly or unknowingly, we all do that now and then. Still in doubt? Okay! When was the last time you considered any website other than Amazon for your daily needs? Or any other food delivery app other than the most popular ones-Zomato and Swiggy. We’re sure you can’t remember it. So, what’s happening here is nothing but ‘Repeat Sale.’ Once Amazon, Zomato, or Swiggy acquired a new customer like us, they successfully retained us with their top-notch customer service and their post purchase experience for the customers. As a result, we become more dependent on them and make more purchases than before! And that’s the magic of Repeat Sales.

Now, not acquiring new customers could be a headache for enterprises. Still, studies show that one of the most sustainable ways of growing a business is retaining old customers. But here’s the catch. Even if the Repeat Sales are more profitable, the first step has to be the new acquisition; because if there’s no first-time purchase, the question of repeat sales would be null and void.

Source: Adobe Digital

However, the issue is that the average e-commerce store spends more than 80% of its marketing budget on the acquisition. Still, only 8 percent of an e-commerce store’s customers generate 41 percent of its revenue. This 8% is made up of Repeat Customers, indicating that they are highly profitable!

This article will briefly discuss the five main reasons why Repeat Sales are more profitable.

Five Reasons Why Repeat Sale is more Profitable:

1. Acquiring New Customers is Costly: According to studies, the cost of acquiring a new customer has increased by nearly 60% in the last five years. It costs five times more to gain a new customer than to retain an existing one. So the budgeting for the new sales can be challenging for the Small and medium businesses.

2. Repeat Customers are Easier to Sell To: Conversion rates on businesses and e-commerce are volatile and depend on the industries’ vertical. An average 1-3% conversion rate is estimated for most e-commerce businesses. For SMEs, it’s a challenge to invest time and money for such a low conversion rate. Whereas “A repeat customer has a 60 to 70% chance of converting.”, says Paul Farris in his book Marketing Metrics. According to the book, existing customers are 60-70 percent more likely to make a repeat purchase, whereas new customers are 5-20 percent more likely to make their first purchase.

3. Repeat Customers are Likely to Purchase More: As per research, repeat customers tend to buy more from their first purchase. A customer has a 27% chance of returning to your store for the second time, and for the third time, they have a 54 percent chance of making another purchase.

Source: blog.smile.io

Moreover, whenever customers come back for repeat purchases, they tend to spend more than before. According to a Bain & Company study, apparel shoppers spend 67 percent more per order after shopping with a company for 30 months

Source: Bain & Company

4. Repeat Customers Spend More in The Key Time: Does it ring any bell when you hear the terms like ‘Big Billion Day’ or ‘Great Indian Festival’ or ‘Big Billion Sell’? Yeah! We all get excited about some extra discounts on our favorite e-commerce platforms like Flipkart, Amazon, or Myntra. Even retail businesses announce special deals on festivals like Diwali or Christmas to drive the sale. The increasing demand for these special occasions pushes the potential shoppers to shop more. According to Adobe, the average holiday shopper spends 17 percent more per transaction, and repeat customers are likely to pay 25% more per transaction during the busy season.

5. Repeat Customers help to Promote your Business: There’s no other reliable marketing strategy than word of mouth. Especially for SMEs, word of mouth is beneficial for business growth. By focusing on repeat sales, businesses can create a pool of loyal customers who, in turn, can promote the business to their circle. This can grow the potential new deal and boost the overall sale. Repeat customers refer to half as many people as first-time buyers.

In the End:

In today’s business ecosystem, repeat customers are the changing factor of any business. Repeat Sales not only help businesses to attain sustainable growth but it creates trust among the consumers, which is the driving factor of any enterprise. To increase the customer retention rate, companies need to pay attention to the post-purchase experience for customers. A five percent increase in customer retention increases a company’s profitability by 75 percent. And repeat customers help improve the business value, but they’re also a powerful tool to gain new customers.

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