Ask an owner what they made last year and the answer comes instantly. Ask what percentage of their customers came back and you get a pause.
The second number is the more useful one, and you can work it out in about ten minutes with whatever records you already have.
How to get it
Take last year's customers. Count how many of them had bought from you before. Divide by the total. That is your repeat rate.
For a lot of service businesses it lands somewhere between fifteen and forty percent. Whatever your number is, it is worth knowing, because everything downstream depends on it.
Why it decides what a customer is worth
Say the average job is $600. If a customer buys once, a customer is worth $600 to you.
If they typically come back twice more over three years, that same customer is worth $1,800. Nothing about the first sale changed. What changed is how much you are allowed to spend to get one.
At $600, spending $150 to win a customer feels aggressive. At $1,800 it is comfortable, and you can outbid every competitor still doing the first calculation. In a market where everyone advertises to the same people, the business that can afford to pay the most for a customer simply wins.
That ceiling is not set by cleverness. It is set by your repeat rate.
The cheap way to move it
Almost all the effort in small business marketing goes into strangers, while the people who already paid you get nothing once the invoice clears.
Moving repeat rate is mostly a matter of showing up again at the right time. A reminder when the service is due. A note six months later. Knowing what somebody bought last time so the next conversation starts halfway along.
These cost close to nothing per customer and they compound, because a customer who comes back a second time is far more likely to come back a third.
What to do with the number once you have it
Write it down and check it again in six months. If it moves up, every marketing dollar you spend got more effective without you touching the marketing.
Most owners try to grow by pouring more in at the top. The faster gain is usually at the other end, where the customers you already won are quietly walking away because nobody asked them to come back.
Common questions
What is a repeat customer rate?
The percentage of your customers in a period who had bought from you before. Count last year's customers, count how many were returning, and divide. For many service businesses it lands between fifteen and forty percent.
Why does repeat rate matter more than revenue?
Because it determines what a customer is worth over time, which sets how much you can afford to spend acquiring one. A customer who returns twice is worth three times a one-off, so you can outbid competitors who only count the first sale.
How much should I spend to get a new customer?
It depends on what a customer is worth across their whole relationship with you, not on the first job. Work out the average job value and how many times a typical customer returns, then decide.
What is the cheapest way to increase repeat business?
Contacting past customers at the moment they are due back. Reminders and follow ups cost close to nothing per customer and compound, since someone who returns a second time is much more likely to return a third.
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