the value of customer retention sign

Value of New vs Returning Customers

Regardless of the business, customers can generally be broken down into one of two different categories: new or returning customers. While there’s nothing wrong with trying to attract new customers to your establishment, you shouldn’t neglect those who have already made a purchase.

In this post, we’re going to take a closer look at the value of new vs returning customers.


Returning customers can account for a significant portion of a small business’s sales and revenue. According to a study conducted by SumAll, 25-40% of total revenue generated by the leading brands in its network came from returning customers. Granted, that number is below the amount of revenue produced by new customers, but it’s still a pretty huge chunk nonetheless. Business owners who fail to cater to their existing customer base can expect to lose roughly one third of their potential sales, assuming this study is correct.


The same study conducted by SumAll found that small businesses with 40% or more sales coming from returning customers generated roughly 50% more revenue when compared to small businesses with only 10% or fewer sales coming from returning customers. What does this mean exactly? Well, statistics such as this indicate that returning customers spend more money. If a customer has already purchased a product or service from a business, he or she will likely feel more comfortable making future purchases, which seems to be the case here.

A similar study conducted by the Gartner Group found that 80% of the average business’s sales will come from 20% of its existing customers.

Acquisition Cost

How much does it cost your business to acquire a new customer? Acquisition costs can quickly burn a hole in a company’s budget, forcing them to cut back on other expenses. Rather than spending your money to acquire new customers, however, you should consider using that money to retain your existing customers. Retaining an existing customer costs a fraction of the price of acquiring a new one.

So, How Can I Retain My Existing Customers?

Now for the million-dollar question: how do I can retain my business’s existing customers? For starters, you should obtain their email address in a CAN-SPAM compliant method, such as an opt-in form on your website. Many e-commerce websites ask customers if they would like to sign up for an email newsletter to receive special discounts and promotions. Assuming they leave this option ticked “yes,” the e-commerce store may continue to email the customer new deals and offers. You can follow a similar structure with your business, capturing users’ email addresses and uses them for follow-up marketing.

You can also boost your number of returning customers by implementing a loyalty rewards programs. If a customer earns 1 point for every dollar he or she spends, they will naturally choose your business over one of your competitors.

Is there anything else that you would like to add to this post? Let us know in the comments section below!

Article Name
Value of New vs Returning Customers
Many businesses invest a lot resources into acquiring new customers when they may be better off investing more into retaining existing customers.

3 Comments to Value of New vs Returning Customers

  1. Meghan L. says:

    It amazes me when any business fails to realize the unique value existing and new customer each bring. Our company strives to recognize the value of each and make each new visitor a returning visitor.

  2. Bailey says:

    Loyalty reward programs are a great way to retain existing customers. We have had much success with our program.

  3. entrepreneur_spirit says:

    I really enjoy seeing the value of retaining existing customers. I also love Megan’s outlook – a goal of making all new customers returning customers.

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