When comparing “same-store sales” and “new customers,” you’re essentially looking at two different metrics used to assess the performance and growth of a business. Most Graphic Communication companies are not looking at their business in this manner. I think they should begin breaking out these numbers and let me go into detail as to why I think it’s important.
Same-store sales, for our purposes, is revenue from customers that you’ve had for 12 months or longer. This metric excludes sales from newly opened customers. This metric helps gauge the organic revenue growth or decrease of existing customers. It shows how well a company is growing or maintaining its sales with established clients. Same-store sales are often used to assess the effectiveness of a company’s operational strategies, marketing efforts, customer retention, and the overall health of the brand in a stable market environment.
New customers refer to individuals who are purchasing from a business for the first time. This metric focuses on the growth of the customer base. I typically would call a customer new for the first 12 months. Tracking new customers helps in understanding how well a company is expanding its market reach, attracting fresh clientele, and growing its potential for future sales. This metric is crucial for assessing the effectiveness of customer acquisition strategies, such as marketing campaigns, promotions, or new product launches.
So, how to compare these two metrics? Same-store sales focus on internal growth and the ability to maintain or increase sales within existing stores, while new customers highlight the company’s ability to expand its customer base. Consistent same-store sales growth is often seen as a sign of a mature and stable business, whereas a surge in new customers might indicate successful marketing and brand appeal but does not necessarily translate to long-term growth if customer retention is low.
What would be ideal? A balance between strong same-store sales and a steady influx of new customers. High same-store sales growth with declining new customer numbers could signal potential future stagnation, while an increase in new customers with declining same-store sales might indicate issues with customer retention or declining loyalty.
Businesses often aim to track and optimize both metrics to ensure both sustainable growth in established markets and expansion into new ones. These also provide benchmarks for the effectiveness of the retention team as well as the new business initiatives. Remember, your potential is not a fixed destination but a dynamic path of growth and development – take on these initiatives with that in mind. Enjoy the ride!
Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to ambitious owners and CEOs in the Graphic Communications Industry by providing direct and realistic advice and insight, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at [email protected].
