Imagine you've discovered that your company isn't attracting as many new customers as it should be, and you'd like to fix that. Customer retention is one of the most cost-effective approaches to lower your customer acquisition costs. This is true because your current customers are the most profitable, hence, it's worth your time and effort to retain them!

Acquiring new customers is certainly crucial since you can't have a return customer if they never make their initial transaction, and your business cannot grow if you don't acquire new customers to join the existing ones. However, because the average e-commerce store spends more than 80% of its marketing budget on acquiring new customers, retention gets the least priority.

Although prioritizing the acquisition of new customers over retaining old customers is normal for most e-commerce stores, it's surprising that up from 20% to 48% of e-commerce store's revenue is generated by repeat customers, indicating that they are incredibly profitable!

In subsequent paragraphs, we'll look at some statistics that show how important repeat customers are and how much money they bring in. By the end of this article, you'll have all the evidence you need to know that Subscription is the ultimate key to securing repeat customers, and you'll see that it's a worthwhile addition to your marketing approach

Repeat Customers are Profitable for Five Reasons

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1. Repeat Customers Spend More in Holiday Seasons

Most e-commerce businesses generate the majority of their revenue during a single peak season. In March or April, if you sell swimming suits, you'll see a jump in sales. If you sell costumes, October will be a busy month for you. However, the busiest period for most retailers is between Black Friday and Cyber Monday, and Christmas.

The boost in sales is attributable to both increasing demand, which brings in more prospective customers, and consumers buying more because it's the holiday season. But how much more do customers spend throughout the holiday season?

According to Adobe, during the holiday season, the average buyer spends 17% more on each purchase.

2. Repeat or Subscribed Customers Spend More

Repeat consumers not only permanently subscribe more frequently, but they also have a greater average order value than first-time buyers.   This suggests that your loyal consumers are spending more to buy from you each time.

How much a repeat customer pays is strongly influenced by the number of previous transactions and the length of time they've been a customer.

Consider the first factor that influences how much a repeat consumer spends: the number of past purchases. Studies reveal that your loyal top 10% spend 3 times more per order than the lower 90%, and your top 1% of customers spend 5 times more than the lower 99%.

The length of time a consumer has been patronizing you are the next crucial consideration. Studies reveal that clothes buyers purchase 67% more per order after buying from a brand for 30 months.

Repeat and subscribed customers have a high lifetime value, which translates to a larger order value over time and more revenue for your business.

3. Repeat or Subscribed Customers are 60% to 70% more likely to Patronize you again

A consumer has a 27% likelihood of returning to your store after their first transaction. While this isn't a bad return rate, if you can get the consumer to return for a second and third purchase, you'll have a 54% chance of getting them to buy again.

You might be wondering how you might persuade your consumers to make a second or third purchase; adopting the Subscription Business Model takes care of this for you. While you may assume that offering a discount on the next order is a terrific approach to entice a customer to return, you should proceed with caution. This is because customers that obtain a discount either become accustomed to receiving discounts or wait until a discount is available before making another purchase. To encourage customers to return to your site, we advocate implementing long-term retention strategies like the Subscription Businesses Model. With a subscription, you're allowing your customers to commit to coming back every other time while you generate recurring revenue.

4. Repeat or Subscribed Customers are Easier to Sell to

Although online conversion rates are unpredictable and vary by business, recurring customers have a 60 to 70% chance of converting. That means that the more subscription customers you have, the less money you'll have to spend on new customer acquisition and conversion strategies.

According to a study conducted by Adobe Digital Index, a consumer who has made two purchases with your store is nine times more likely to convert than a first-time shopper.

That is why repeat transactions per subscribed customer result in a significant increase in conversion rates and revenue.

5. Repeat or Subscribed Customers are Free Marketing Avenues

Repeat customers are not only more valuable when buying, but they also present you with a lot of marketing opportunities. A return customer means more word-of-mouth advertising for your business, which is the best type of advertising aside that it's free.

Research reveals that the number of individuals a customer refers to your e-commerce store grows in proportion to the number of transactions they make. Each time a consumer makes a purchase, they become more at ease with your product or service and are more likely to recommend you to others.

Return or subscribed shoppers are 50% more likely to refer others to a store after 10 purchases as compared to one-time shoppers. This research shows that returning consumers might boost profits.

Final Thoughts

The profitability of your store begins with getting your existing customers subscribed.  Subscribed consumers will not only spend more money at your store but will also market you to new customers, making them a free but effective customer acquisition tool. To get the most out of your recurring customers, you need to focus on customer retention and subscription has proven to be a leading model for achieving it.

If you're thinking of turning your returning customers into subscribers, and you need help getting started, reach out to the Chargezen support team or write me at success@trychargezen.com for assistance.