New Customers Vs Existing Customers

What is a ‘healthy’ percentage of new customer purchases versus repeat customer purchases? Obviously, a lot depends on what you are selling. For the packaging machinery industry, my opinion is a percentage of 50/50. As we all know it is far less expensive to sell to repeat, happy customers than to find new customers. But it is dangerous for any company to depend too heavily on its existing customers at the expense of seeking out new ones. The business world is fraught with companies buying each other out and consolidating. Where you once had two good customers, you may now find yourself with one slightly larger customer. Or worse, you may lose one of your good customers when they are bought out by another company who has standardized all their plants with your competitor’s machinery.

On the other hand, if you find your sales coming from new customers is starting to outpace existing customer sales (and you have not increased marketing efforts to find new customers) - that may be a symptom of a more serious problem. You need to check with Customer Service to find out if your existing customers are switching brands because your product’s quality and/or service has slipped.

If you track this information, you will notice a slight swing from time to time. The percentage will rarely always stay at 50/50. There will be periods when it will shift slightly from one side to the other and back. This is to be expected. However, if you notice a trend that appears to be steadily moving in one direction, take heed and look for answers, before it is too late. Think of your existing customers as the solid foundation supporting your company and the new customers as the growth you build on top of the foundation. If you start losing existing customers, your foundation will start to crumble and may cause a complete collapse. On the other hand, if your new customers do not continue to grow, your ‘building’ will become swamped by the skyscrapers all going up around you.
The author, Marge Bonura, is the Director of Sales & Marketing for New England Machinery, Inc. (NEM). NEM is a leading manufacturer of bottle unscramblers, cappers, orienters, retorquers, lidders, pluggers, pump sorter/placers, scoop feeders, hopper elevators and much more. The company has been in business since 1974 selling to the food, beverage, pharmaceutical, personal care, chemical, household products, automotive and other industries. For more information on NEM, visit their website at http://www.neminc.com/.