|Existing Customer Base Or New Customers - Majority Of Sales?|
Once you have a decent customer base; do you guys rely on your existing customer base to bring in a majority of your sales, or are your new customers the ones that still bring in a majority of your sales?
For us, new customers account for probably approximately 90% of sales. But we have a pretty small SKU selection of 500 items or so.
However, returning customers really are an unbeatable asset for a company, including our. Besides the fact they`re buying more stuff they tend to be very low maintenance customers. They`re much less likely to make idle complaints, make returns, etc. which is really where a lot of resources can be eaten up. In fact, there was a case this year where we ended up sending a repeat customer 4 wrong shipments (there was a mis-packaging problem) each time he laughed it off and actually ended up buying each incorrect shipment and selling it to friends.
It depends what you are selling. I sell non-durable goods which are used up in about 3-6 month so I have customers who have been ordering for 10 years and have placed 30 or 40 orders in that time. About 60% of my daily sales are from returning customers. However I do not "rely" on my customer base. I always try to bring in new customers.
However if you sell "buy once in a lifetime" products things will look very different.
My own ecommerce experience is pretty specialist (selling magazine advertising) but as a customer I go with jecasc. For consumables I will generally go back to a reliable supplier. For capital expenditure I will shop around more.
After 4 years we are probably about 80-85% new customers. The repeat customers tend to spend more though. Part of our relatively low repeat rate is that the majority of our business is through major marketplaces - eBay, Amazon, etc. Amazon tends to have more "new" customers and it is hard to convert them as they tend to be marketplace loyal and it is difficult to brand your service and experience. Ebay is a little bit better but ebay also has its own customer type that doesn't always convert but we do get ebay repeat customers, just not on our website. Greater marketing to our existing customer base could probably shift some of this but our growth rate, especially this year, makes it hard to concentrate on building repeat business.
Probably depends on the product. Our product lifespan is close to a decade or so. So initially it's almost all new clients. But over time businesses in my niche can depend almost 100% on existing clients for sales. I see the occassional repeat sale right now, but in another few years that should increase substantially.
[edited by: wheel at 2:00 pm (utc) on Jul 8, 2011]
After 8 years, 95% new customers. We are not the lowest-priced store, but our in-stock ratio is high.
Our market has a few competitors who like to give away the store, and regular customers tend to buy from a handful of stores they've tried in the past, whoever happens to be lowest-price at the time.
Good question. The great fallacy of the 1990s dot com bubble era was overvaluing "the lifetime value of a customer." Firms would raise millions from VC cash and blow it all on a couple of Super Bowl ads. (there was also the "first mover" advantage LOL). You wonder if some of those 90s geniuses, and their investors, ever ran a lemonade stand. Customers are pretty transient.
We're in a very, very sticky field. And I think we do a great job with customer service. Our prices are fair. Yet after a decade, more than 80% of our current sales are to first-timers. Probably a lot more.
Repeat customers are vital. They buy a lot. But you always have to be looking for new customers.
Repeat customers are the money makers for us. A large percentage of our sales are repeat. I dont know specifically right now, but i'd venture a guess of around 70% are repeat. We print a different marketing message on receipts for first time customers and just going by that is where im getting the 70%. We work hard, very hard, to get those first time customers. We feel once we have them, they will be repeat. We are in a market that is a repeat type of business. 2011 has been a huge focus on getting new customer for us, we are dedicating lots, and lots of marketing money for this purpose.
Your question got me thinking as I realized I was making an educated guess in my posting and did not have the actual figure. I wrote a script to check the data since 2004. In June 2004 (after 3 years in business) I had 65% new customers, 35% returning customers. In June 2011 the number is 70% returning, 30% new.
Which actually frightened me for a moment, since this could indicate I am no longer able to attract new customers. However the absolute numbers show that the amount of new customers is still increasing too - more slowly than at the beginning, but nevertheless.
So if you want to have accurate data you need not only compare the percentage new/returning customers but also check how the absolute numbers develop.
Quite an important figure - which actually totally escaped my notice until now, so thanks for the thought-provoking impulse.