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The most critical marketing goal any business can have is attracting more customers. However, is that the correct approach? Are you spending your money (and time) smartly if you are focusing only on attracting new customers?

You might want to mull over the following truth:  If you make existing customers a priority, you’ll get the most return from your marketing spend.

This does not at all mean that attracting new customers will be a waste of your time. However, what this means is that your current marketing strategy might be costing you unnecessary money. With that in mind, let’s chat about how you work out the value of a lifetime customer. In other words, what is the worth to hang onto one customer?

Are you ready to be found online?

Are you ready to be found online?

Or Call +27 (0)82 203 4180

Or Call +27 (0)82 203 4180

The Cost of Acquiring New Customers:


Research says it costs 5 times more to get a new customer to purchase from you as it does to build loyalty with the current customers you already have. Why is new customer acquisition so expensive, you may ask. Let me explain:

  • Consumers need, as a rule, 7 to 10 “contacts” from a brand before they make a purchase.
  • Only a tiny percentage of the people who see your ads or social media posts will make a purchase.

Attracting new customers is hard work and expensive. Wouldn’t you put your money to work, by keeping the customers you currently have, instead?

It is true! Loyalty Drives Sales:

Let’s talk about what happens when a customer purchases from you. Some psychological quirks that kick in make it more likely they’ll buy from you again.

1. The Sunk Cost Fallacy tells us that once we’ve spent money on something, it must be a good thing. We’re more likely to give money to the same source because it reinforces our belief that we made the right decision the first time around.

2. Choice-Supportive Bias is what makes us more comfortable buying familiar things than unfamiliar ones. Our reasons for buying something might not be rational, but we’d rather stick with a product we’ve already tried than choosing a new one. Think of it as “the devil you know” in action.

3. In-Group Favoritism is a cognitive bias that Apple used quite effectively to create a feeling of camaraderie and superiority among their customers. In other words, identifying with the Apple brand was something that made their customers feel special – and that increased their loyalty to the brand.

The take away here is that first time customers want to become repeat customers. There is a human inclination to be loyal and to repeat behaviour, and that’s one of the main reasons that it’s less expensive to keep a customer than to attract a new one.

Are you ready to be found online?

Are you ready to be found online?

Or Call +27 (0)82 203 4180

Or Call +27 (0)82 203 4180

What Is Your Customer Worth?

How much is a loyal and permanent customer worth? The answer to this can vary.

One of your loyal customers might spend five times as much as another. The conversion rate for any potential new customer is low – usually between 3% and 5%. However, the conversion rate goes up when we’re talking about repeat customers.

  • A customer that only purchases something from you once has a 27% chance of making a repeat purchase.
  • A customer who already purchased something from you twice has a 45% chance of making a third purchase.
  • A client that has already bought something from you three-times has a 54% chance of making a fourth purchase.

If a potential customer has only a 3% chance of buying something from you or making use of your service, it means that 97 out of 100 prospects are costing you money that you will never receive back.

Pretty grim, right? However, those three customers who became loyal customers are nine times as likely to purchase from you as any new customer would be. See, your conversion rate climbed wonderfully! The numbers will continue to rise over time. When customers have a comfort level with your products, you will have repeated purchases from them.

Here are some hard numbers to get an idea of what a lifelong customer might be worth to you. Let’s say that you spend R1,500 a year on marketing to potential new customers, and in a year, you attract 100 new customers. That means that your cost per customer acquisition is R15.00.

That number might seem high to you, but you can’t understand your acquisition cost without including the average purchase made by customers and the likelihood that they’ll purchase items from you repeatedly. If your product sells for R20.00 with a 100% mark-up, and you spend 25% of your profits on overhead, you’re looking at an initial return of R7.50 per customer. This means you’ve earned back 75% of what you spent to get that customer.

Now, let’s see what happens if that same customer buys from you repeatedly, assuming all prices, mark-ups, and overhead stays the same:

  • If that customer buys from you for the second time, you’ll have earned back 150% of what you spent.
  • By the third time he purchases, your ROI goes up to 225%.
  • At the fourth purchases, it increases to 300%. Each extra purchase puts you further into the “black” with that customer.

If you offer a product that people purchase monthly or even yearly, it’s easy to see why you would want to keep that customer for as long as possible. If you spend a little money on one email campaign or a loyalty program to help keep them, it’s still more cost-effective than finding new customers.


Attracting new customers might feel more exciting than retaining old ones, but you’ve got to ask what’s more important to you: the thrill of attracting a new buyer, or the money that comes with retaining an existing one. Personally, I’ll take the money.