Written by Dan Marzullo

July 9, 2020

Every business wants repeat customers and it’s no wonder why. Repeat customers help boost revenue, offer help in marketing efforts through referrals, and assist in market research through surveys. A business can also save money by focusing a substantial amount of time on customer retention rather than acquiring new ones.

Just as important as repeat customers are repeat purchase rates. Repeat sales are purchases that customers make to replace the same items or services that they had bought and consumed previously. Sometimes repeat sales are also referred to as replacement sale or repurchase. A high repeat purchase rate is a strong indicator that your business is offering each consumer value that is keeping them engaged with your brand.

Although the initial sale to a new customer is cause for celebration, it isn’t an indicator that the customer will purchase from your business again. Considering your customer retention takes time since multiple sales are made over an unpredictable amount of time. That means that your team is having to wait to assess and implement any marketing strategy changes.

This is where calculating your business’ repeat purchase rate comes in. Your team will be able to see trends and make tweaks to the eCommerce marketing strategy as data becomes available. You will also benefit from understanding the differences between remarketing vs retargeting. Both strategies will be useful as you try to boost your repeat purchase rate. 

How Do You Calculate a Repeat Purchase Rate?

You’re ready to figure out your actual repeat purchase rate, but how can you find the data? Thankfully, the equation for finding your current repeat purchase rate isn’t complicated.

Repeat purchase rate equals the number of customers that bought from you more than once in the past 365 days divided by the total number of customers in the past 365 days. For those visual learners out there, this helpful chart from Zaius is great to imprint on your memory. 

What Is a Good Repeat Purchase Rate?

Knowing the ideal repeat purchase rate ultimately depends on your industry. Repeat purchase rates can vary dramatically depending on the product category you’re working in. This means the target percentage you want to hit isn’t always apparent. Typically, any repeat purchase rate in the 20% to 40% range is viewed as being successful. 

How To Improve a Repeat Purchase Rate.

If your team finds that your business’ repeat purchase rate is low then how can you help boost those numbers?

Imagine customer retention and repeat purchase rate as a Venn diagram with customer retention to the left and repeat purchase rate to the right. At the intersection in the middle where both overlap, you would have your marketing strategy. Your business’ marketing strategy would be aiming to retain loyal customers that shop with you frequently. 

For eCommerce companies, repeat purchases account for as much as 50% of total sales. With such high stakes and an extremely competitive platform, your business needs to have a flexible, yet effective strategy in place to ensure customer satisfaction.

Keep refreshing data. Test your repeat purchase rate on a rolling basis. Like we mentioned above, it’s ideal that your business pulls your repeat purchase rate from a year (365 days) of customers that purchased more than once divided by the number of customers in a year (365 days). Of course, that doesn’t mean that your data should only be looked at once a year.

For example, your data can be pulled for customers that purchased April to April, May to May, and so on. This will allow your team to see trends and make changes as needed.

Make changes. A great or trending marketing strategy doesn’t mean that it’s great for your business. What is working for other eCommerce businesses may not be helping your repeat purchase rate. As we discussed, your repeat purchase rate will depend a lot on your product and niche. For example, if you have an online yoga studio where customers can buy an annual pass for classes then that needs to be taken into consideration for your repeat purchase rate.

Customers holding annual passes may literally not buy again for a year. This is where you would make some tweaks to your eCommerce marketing strategy and try to lure those annual pass holders to purchase some of your online specialty classes or physical products.

Take measured risks. We all know that data certainly matters in an eCommerce business. We are forever gauging our progress and efficiency. There also needs to be some space reserved for risk-taking. When it comes to repeat purchase rate there are so many ways that you can aim for higher numbers. Of course, your marketing strategy plays a massive role in customer retention and repeat purchase rates.

Try assessing your internal approaches as well. Take a risk by having your whole team–not just your marketing team–assess your existing strategy for repeat clients. Fresh eyes on an existing marketing strategy may offer some new ideas. Take risks in other areas by surveying your existing customers or playing around with your brand voice.

How Do You Keep Customers Coming Back Again?

Ah, the age-old question. Even wildly popular multi-billion dollar conglomerates center their business models around this subject. Back to the Venn diagram visual, there are going to be overlaps in your strategy of customer retention and your strategy for increasing repeat purchase rate. Here are some campaigns that your business can kick-off to help boost your repeat purchase rate quickly.

1. Abandoned Cart Nudge 

Shopify shared that roughly 60 – 80% of online shopping carts are abandoned before the customer completes a sale. That implies that your sales numbers may only be one-third of what they could potentially be if it wasn’t for that cart abandonment rate. Enter abandoned cart emails. As a customer, re-engagement can sometimes be annoying, but the fact is that these types of emails are effective. Over one-third of clicked cart recovery emails convert to a sale. Implementing abandoned cart emails doesn’t have to be robotic (automated, yes) but can be fun and showcase your eCommerce brand.

abandoned cart example

2. After-Purchase Thank You

Understanding the importance of customer service is crucial for gaining returning customers. Show customers a little appreciation to get that repeat purchase rate up. It may seem like a small token, but customers do take notice. Your after-purchase thank you email can also be formatted to serve as a receipt and provide a coupon code for a future purchase.

Repeat purchase rates go up when customers believe they matter and when they can begin to embrace the trustworthiness of your eCommerce brand. This post-purchase email from MeUndies is perfectly aligned with their brand (vibrant, fun, cheeky—no pun intended) and it also provides customers an open invitation to reach out to customer service if they need anything.

post-purchase example

3. Loyalty Program Invitation

If you really want to increase your repeat purchase rate then offer customers a reason to be, well, repeat customers. Everyone loves a rewards program. Free points every time you shop? Sign us up! 

The downside of a loyalty program is that they’ve been around for so long and they’re all beginning to look the same. Customers also worry about being inundated with emails. With all of this information in hand, go to the drawing board and create a customer loyalty program that’s on brand and has your repeat purchase rate in mind. A few tips to keep in mind:

  • Keep your program simple. If customers have to purchase 30 items, share on social media 10 times, and send a referral link to seven friends in order to get three points towards a product then it’s not going to work.
  • Perfect the email. Set up a drip-email campaign for customers that are in your customer loyalty rewards program. Keep them engaged by offering exclusive offers, sneak peeks, and other fun perks.
  • Streamline referrals. Implementing an incentive for referrals into the loyalty rewards program is smart. It needs to be done with tact and good timing. Customers need to warm up to your brand a bit before they’re asked to give back. 

This email does a great job of creating a rewards program like a free VIP opportunity. The extra push of the countdown is genius since it puts gentle pressure on customers to realize that it’s a limited time offer.

loyalty program example

Key Takeaways

It’s important to keep your repeat purchase rate and customer retention compartmentalized as your team strategizes. Although they do overlap in some ways, they need to be calculated and approached differently. Repeat purchase rate needs to be looked at often and immediately, and with it in mind, applied to your business strategies across the board. 

A repeat customer is great, but aiming for frequent sales needs to be the goal. Remember that your repeat purchase rate will vary and the success of the numbers is reliant on the product you’re selling and your niche. 

Taking calculated risks and applying new techniques to your marketing strategy may help your eCommerce business to increase its repeat purchase rate. 

The bottom line is that customers need to trust both the value and trustworthiness of your brand. If they don’t then they will move along without a second thought.

When was the last time your team assessed your repeat purchase rate? Where are there areas for improvement? What is one successful strategy you have implemented to raise your repeat purchase rate?

Start building trust with shoppers and increase your purchase rate.