Repeat Purchase Rate: An Essential Metric for Businesses

Piyush Gupta | Manager, Product Growth
Reading Time: 4 minutes

Acquiring new customers is tough now. According to a study conducted by HubSpot, customer acquisition costs have increased by over 50% in the last five years. It costs five times less to keep an existing customer than to attract a new one, so it’s important to emphasise strategies that’ll help you retain more and more customers. You must focus on strategies that focus on increasing purchase frequency and the customer lifetime value.

Increasing repeat business is crucial for any business. How can you create repeat consumers without marketing? In this article, we’ll cover:

  1. The meaning of repeat purchase rate
  2. Importance of repeat purchase
  3. How to calculate repeat purchase

What is Repeat Purchase Rate?

The repeat purchase rate is when customers buy from a business again after they have already made a purchase. You can calculate it either as a percentage of all customers or all transactions. 

For example, if a customer makes a single purchase and then makes another purchase within a specific period, it’ll count as a repeat purchase. Then you can use this metric to calculate the repeat purchase rate.

Importance of Repeat Purchase 

There are two types of shoppers: new customers and repeat customers. Knowing how many people are returning to your store will give you a good idea about whether your business is growing or not.

An important factor in customer lifetime value is how often they return. Customer Acquisition Costs (CAC) occur when new customers arrive at their first purchase and are a significant expenditure for any e-commerce business. People who keep coming back to your shop without fail are vital to the longevity of a company.

A 5% customer retention rate boost will boost your profits by more than 25%. Keeping customers happy is an essential part of any business, and when you have satisfied customers, the chances of them coming back are high. 

How to Calculate Repeat Purchase Rate

Your repeat purchase rate is calculated by dividing the total number of repeat customers with the total number of customers buying from you. This number will tell you about the percentage of customers buying more than once from your store. 

Example: There are 200 total customers you have in your store. Of these 200, 20 have not purchased from you in a specific time period, 120 have purchased once, and 60 have purchased more than once. Therefore, your repeat rate is 30%.

60 (Total Repeat Customers)/200 (Total Paying Customers) = 0.30

Improving Your Repeat Purchase Rate

You can improve customer retention rates by focusing on your loyalty programs. What are the challenges that customers encounter across their purchase journey? How are they approached, and what motivates them to remain loyal to your business? Focus on making the overall experience a smooth one, which could help you more than anything else in retaining customers.

Now, here are some things you can do to boost customer loyalty and improve the repeat purchase rate of your e-commerce store.

Offer Incentives

Depending on the needs of your repeat buyers, target a particular time to offer them rewards after they’ve made three, four, or five purchases. Let their new product choices influence what rewards you’re going to offer. But, you must ensure they remain valuable and provide plenty of value by being exclusive to them.

Create a Customer Loyalty Program

Allow buyers to sign up for your loyalty program when they buy a product or service from your shop. Give them an incentive to return to you. Make it alluring to various demographics and personalize your brand. Place personalized messages before, during, and after the process. It’ll help entice customers to better themselves through your business by offering them a reward.

Create Referral Programs

Products on e-commerce sites have unique codes, known as discount codes which can be applied to purchase and attached to a specific customer. In this case, you would only want to offer the discount code if the recommendation was made in person, but it was done by phone or email over social media. 

The reason for using referral codes is to follow up and ensure that your strategy works effectively. The better the product you have, the less outsourcing and advertising are needed, ultimately saving money while benefiting long-term sales.

Finishing Up

Calculating your repeat purchase rate can help measure the success of your business and the loyalty of your customers. We hope this blog post has helped you learn how to calculate your repeat purchase rate.

Use EasyInsights to automate your workflow and increase your repeat purchase rate. You’ll discover how powerful EasyInsights is at automating your data directly from the systems you host or integrate online. 

In under two minutes, you can choose your metrics and pull data from existing datasets with no development – the goal of the tool is to save marketers time. Without having extensive technical know-how, all you require is basic know-how and the tool will do the rest and help automate manual tasks.

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