If you have an unlimited pool of potential customers and also unlimited budget to acquire them, this article is not for you. Your shop can survive with one-time sales.
If your target audience or budget, though, is not so huge, you need a high repeat purchase rate to stay in business.
Repeat orders mean higher profitability on each acquisition paid. If your CAC is $5 and customer lifetime value is only $15, you make $10. But if customer lifetime value went up to $40, you’re making $35. You could even spend a bit more, say $10, to acquire other segments of customers who’d spend $75 customer lifetime value. The higher the repeat purchase rate, the higher the ROI.
The fact that people buy from you repeatedly also means they like the product – there’s product-market fit. You have found the right audience and the product works. Like many entrepreneurs, Moiz Ali from Native struggled in the beginning, “I knew we had a mediocre product because nobody would buy again.”
Read more about Native’s tactics for success
Repeat orders mean people are loyal to your brand and probably even spread word-of-mouth about you. The more devoted they are, the stronger your community grows.
And finally, when you know that 40% of your customer base will shop this month, it’s steady stream of revenue and a solid ground for sales forecasts.
Generally, the repeat purchase rate is what share of customers buy more than once.
It makes it easy to compare one-time buyers and repeat customers. It is calculated as the ratio between number of repeat buyers and the total number of customers. Of course, it can be calculated for a period of time or all-time.
RPR = Repeat buyers number/ Total number of buyers
If you’re not doing so well, here are several ways to stimulate repeat orders:
Related: How to use customer feedback
Recently, we at Metrillo did research on customer retention among ecommerce brands and we discovered that the average repeat purchase rate is 28,2%.
Note: The research is conducted among clients of ours that consented to participating so these are companies already using Metrilo’s tools to increase their customer retention).
The product category with the lowest repeat purchase rate turns out to be tea with 20,9%. We got one possible explanation from WOW Tea, a client of ours that used to struggle with low customer retention. They told us seasonality is huge with tea since most people drink it for health and slimming benefits, usually before the summer, and then stop. This particular tea brand managed to increase their repeat purchase rate with customer segmentation and careful tailoring of emails to stimulate longer use of their products.
Meal deliveries (29%) and supplements (29,1%) are the first categories with a repurchase rate above the survey average, doing better than stand-alone food products, cosmetics and apparel. That looks very well for products supposedly built for continuous and regular use, even fit for subscriptions.
High-performance sports clothing is worth a mention with its repeat purchase rate of 33%. Niche products with smaller markets should focus on customer retention to ensure a steady cash flow.
And the ultimate winner in customer loyalty are CBD products with the amazing 36,2% repeat purchase rate. We know it’s a controversial product, but any ecommerce brand would like to mimic their success, right?
Read the whole Customer retention report
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