Existing Customers Are STILL More Valuable Than New Ones During The Holidays

A lot can change in 48 months. Four years ago, Netflix had almost no competition, Microsoft’s stock was still treading around $50 a share, and TikTok did not exist. Oh, and the UK was deep in Brexit arguments. So perhaps some things do not change so quickly. Similarly, online customers’ tendencies around the holidays also seem to have some steady features to them. Back in January 2016, we published the results of a research conducted by Optimove’s data lab. It showed that existing customers are more valuable than new ones during the holidays. An updated look into the numbers, but from a more proper holiday-shopping angle, re-emphasizes that conclusion.

The Database

The original research included data from hundreds of millions of customers from more than 180 brands representing a variety of verticals. This year’s research database – while statistically significant with more 750K customers and almost 950K orders placed between Thanksgiving and New Year’s Eve of 2018 – focused on retail brands only, to pinpoint more relevant  holiday shopping behavior. Aside from some expected differences in results – that can be partially attributed to the difference in databases used for both researches - the overall trend is steady and clear, and so is the action-item derived from it: Invest in marketing efforts to existing customers this time of year and see a high ROI on those efforts.

The Insights

Here are some highlights from the new research:

• Between Thanksgiving 2018 and the end of that year,   repeat customers’  average order amount per customer was 17% higher on average compared to new customers.
• Repeat customers’ number of orders per customer was 12% higher on average, and the number of items per customer was 15% higher on average compared to new customers.
• Repeat customers’  number of items per order was 23% higher than average.
• Repeat customers not only buy more during the holidays, but they also tend to retain a greater loyalty to the brand. During 2018, the number of repeat customers who made at least one more purchase with the brand was 260% higher than that of new customers of the 2017 Holiday Season (21% retention of new customers vs. 56% retention of repeat customers).
• As for the 2017 Holiday Season,customers during the following 12 monthscustomer existingcustomer
• In the original research, “survival rate” was 160%. The new study, makes it even clearer that customers acquired during the holiday season are less likely to stay with a brand in the following year.

• The Distribution of customers according to the total order amount demonstrates that new customers tend to purchase at the lower end of the spectrum, whereas repeat customers’ relative majority is pronounced at the highest transactions.

What’s Next?

When it comes to existing customers, it’s all about VIP treatment. Your VIP customers will spend more, purchase more, and make more orders also during the holidays. Give them the royal treatment, and not just through discounts. Offer special editions, sneak peeks, and exclusive concierge services to tend the flame of this special relationship. But what about those newcomers? Don’t they deserve any attention? Of course they do. That’s your chance to turn them into repeat purchasers. Pay off your acquisition costs by nailing retention. The holiday period showcases great acquisition opportunities. But their acquisition is costly, as you’re competing with every other retailer for their spend. Don’t let it go to waste. Now is the time to engage with these new customers to build a long-lasting relationship.