New vs. Returning Customers: Which Is More Valuable?

Cedric Jackson

Apr 18 2019

Many people believe it’s more beneficial to focus their marketing efforts on acquiring new customers. While that might be true in some cases, overall, it’s typically more favorable to hold onto returning customers. To understand why, keep reading.

New vs. Existing Customers

With email and other marketing campaigns, you have to spend a great deal of time finding leads. You need to grab their interest, nurture them, and finally, convert them into loyal customers. In comparison, you already have loyalty from your repeat customers. Although you still need to work at growing the partnership, there is less time and money involved.

Something else to consider is that you can rely on your returning customers to help spread the word about your organization and the product or service you provide. For that reason, you need to share unique content to prospects versus repeat customers. A potential customer moving to the middle portion of the sales funnel indicates that you did something to capture their attention.

Ultimately, the prospect knows they have a problem. Therefore, they’re searching for the right solution. Because you’re still in the process of convincing the potential customer that you have what they need, you would send out content that continues to entice and push them toward your product or service. Once a prospect moves to the top of your sales funnel, you would switch your email marketing content so it’s more informative. At that point, potential customers want additional facts and more in-depth details. They want to see that you have exactly what they need for solving their dilemma.

However, you want to avoid sending out “entry-level” content to your returning customers. Instead, show them how to maximize the value of your product or service.

Cost of New Customers vs. Retaining Customers

The top marketing experts agree that securing new customers is far more expensive than retaining customers. Based on your specific industry, you could easily spend between 5 and 25 percent more to acquire a new customer than you would to retain them. Why? Again, you’re not investing nearly as much time, effort, or resources. Instead, your goal becomes ensuring the satisfaction of your returning customers.

Consider the following statistics from a survey:

  • Although it’s up to 5 times more expensive to acquire a new customer than to retain one, 44 percent of the companies surveyed admitted they focus more on acquisitions.
  • For driving customer retention and loyalty, 89 percent of businesses agreed that the customer’s experience is the most critical factor.
  • Of those surveyed, 76 percent stated that customer lifetime value served as a vital concept for their business.
  • While the success rate of selling to new customers is only between 5 and 20 percent, that increases to as much as 70 percent when selling to existing customers.
  • It’s possible to increase profits anywhere from 25 to 95 percent simply by increasing the customer retention rate by just 5 percent.


Efforts for Securing Prospects vs. Keeping Current Customers

Remember, to secure prospects, you must first identify viable leads. Using different strategies and resources, that can take a significant amount of time. Even as potential customers move to the upper portion of your sales funnel, they’re going to need a lot of hand-holding. That means you have to stay in touch with them often, especially over the first couple of days. For prospects, you have to go beyond normal email marketing to include using direct marketing, advertising, and social media methods.

There’s no need to stay in touch with returning customers nearly as often. Of course, you still want to keep the line of communication open, but as far as pulling out all your marketing aces, that’s not necessary. In this case, the goal is to get your repeat customers to sign up for your email newsletter, which gives you the opportunity to provide them with superior-quality content on a regular basis.

The other option is to provide your team with a CRM, so they’ll know the best time to reach out to your returning customers. With a well-developed CRM, you can track purchases your customers make, their interests, and more. All of that becomes a key component of your customer retention strategies.

Benefits of Customer Retention Strategies

For you to achieve the level of success you want, it’s imperative that you use the right strategies for your existing customers. However, for your strategies to work efficiently and effectively, each stage of your sales funnel needs to add value and tell a story that keeps your customers focused and engaged.

For you to guide a prospect all the way through the sales funnel to become a bona fide customer, you have to take a multifaceted approach. That means optimizing not only your website structure but also its content, landing pages, social media coverage, and so on.

It comes down to this: when you deliver the right content and stay in communication with your returning customers, they become loyal to your brand. As a result, they’ll provide a much better ROI for your organization and become more critical for the long-term growth of your organization.

Benefits of Email Marketing

With products like Sendinblue and Constant Contact, you can create powerful marketing campaigns that target both potential and returning customers, although you must refine the content accordingly. For either scenario, you can use emails to accomplish a number of critical goals, including:

  • Generating more leads
  • Enhancing communication
  • Building credibility
  • Promoting your brand
  • Strengthening relationships
  • Boosting sales


Potential and returning customers add value to your efforts but in unique ways. Just as holding on to current customers is vital to your success, building your customer base is also essential.

One primary difference between the two is that existing customers ensure long-term financial success, whereas prospects help you reach short-term revenue goals. In fact, upselling your existing customers has the potential to be more lucrative because they provide you with lifetime value.

For you to achieve a high level of success within your industry, you need both prospects and returning customers. However, because they each serve a different purpose, you must utilize unique strategies to nurture them. While you might face a slight learning curve, using proven targeting and retention strategies will go a long way in growing your business.

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