The Ultimate Guide to Repeat Purchase Rate in Ecommerce

The Ultimate Guide to Repeat Purchase Rate in Ecommerce

INTRODUCTION

As an ecommerce marketer, you have a lot on your mind.

There’s the constant need to stay on top of the latest trends in the industry, and marketing strategies have to shift in an instant based on what your data is telling you. Not to mention the constant threat of Amazon always looming, as they continue to chip away at your once-loyal base of customers.

But in spite of all these challenges, good news abounds! In fact, there’s never been a better time to be a marketer in the ecommerce landscape. In 2017, overall retail ecommerce sales surpassed $453 billion, up from $391 billion just the year before.

Clearly, there’s no sign of the ecommerce market slowing down anytime soon. But this substantial growth also means competition is at an all-time high. In fact, 73 percent of first-time purchasers won’t make a second purchase from the same ecommerce brand. And considering how many options they’re faced with, that number is hardly surprising.

Customer loyalty as we once knew it is practically a thing of the past, and customers aren’t necessarily tied to a brand just because they had one good experience shopping with them.

In the hyper-competitive world of ecommerce, how can you attract loyal customers who will return to purchase from you time and time again? The key lies in engineering the repeat purchase.

From defining what repeat purchase rate is, to maximizing it to benefit your business, we’ll cover it all in this guide. Plus, we’ll see how businesses like Tea Forte are seeing extraordinary results—and more loyal customers—by focusing on this key metric.

Ready to see the magic of the repeat purchase in action? Let’s dive in.

WHAT IS REPEAT PURCHASE RATE?

Few things bring as much satisfaction as learning that a new customer has made their first purchase. It’s the marketer’s equivalent of beating the claw machine at an arcade: It may require ridiculous amounts of work and tons of strategizing, but it’s oh-so-satisfying.

But what happens if that customer buys once, and only once? So much for winning that prize and patting yourself on the back.

If you don’t have a repeat purchase strategy in place, a first purchase could be just that: a one-time purchase, and nothing more. That’s why repeat purchase rate should be one of your go-to KPIs as an ecommerce marketer.

Simply put, repeat purchase rate clues you into how many paying customer return to buy from your brand after making an initial purchase, giving you insights into how much of your current customer base has returned to purchase for a second time. This key metric can really help you understand the health of your customer base and whether your marketing is effectively encouraging customer loyalty.

HOW TO CALCULATE REPEAT PURCHASE RATE

Now that you have a clear understanding of what repeat purchase rate is, let’s look at how to calculate it so that you know exactly what to track when analyzing your campaigns.

If you’re more of a visual learner, here’s how to think about repeat purchase rate in the form of an equation:

Pretty simple, right? A good repeat purchase rate confirms you’re doing a great job of providing value to your customers, a large portion of whom are satisfied enough with your product to stay engaged with your brand and buy again.

Because repeat purchase rates can vary wildly depending on the product category you’re working in, the target percentage you want to aim for isn’t always clear-cut. Typically, any repeat purchase rate in the 20-40 percent range is viewed as being successful. But you know your business better than anyone else, so measure accordingly.

Let’s say you’re an ecommerce brand that sells handcrafted mittens through your website. With a total of 4,700 customers in your B2C CRM, you’re on track to hit all of your goals for the year. But of those customers, only 300 have ever come back to your site to purchase again. Thus, your repeat purchase rate is just over 6 percent. There’s definitely room for improvement when it comes to convincing previous buyers that one pair of mittens isn’t enough for their frigid hands.

WHY REPEAT PURCHASE RATE MATTERS FOR YOUR ECOMMERCE BRAND

Maybe you’re still not convinced repeat purchases should be the lifeblood of your business. After all, you may think you’re doing just fine as is (4,700 customers for a niche mitten business is pretty great, right?).

Not quite. As the cost of customer acquisition continues to rise across channels, companies are starting to feel the impact. For that reason alone, your end goal shouldn’t necessarily be acquiring first purchases from new customers, as much as that might make your ecommerce heart flutter. Instead, focus on how you can take those new customers and obtain a second purchase from them. From there, customers are much more likely to return for additional purchases.

Another reason why the repeat purchase mattes so much? Consider the fact that a customer who makes a second purchase usually spends up to three times as much as they did during their first purchase. That’s a lot of mittens!

Not only that, but 53 percent of customers who’ve made a second purchase with a brand come back to make a third, and of those who made a third purchase, 64 percent make a fourth… and the odds just keep increasing from there.

Once you’re on the path of repeat purchases, you can start to think about more long-term strategies around your customer retention and loyalty programs, which are the perfect complements to what your repeat purchase strategy will lay the foundation for.

In the end, a high repeat purchase rate signals that your customers find so much value in your product that they wouldn’t dream of buying it anywhere else, even if they could get it for faster and cheaper on Amazon. They love your product and are completely loyal to your brand. This is exactly why repeat purchase rate is so valuable to you as a B2C marketer.

HOW TEA FORTE INCREASED ROI BY FOCUSING ON REPEAT PURCHASE RATE

Implementing a repeat purchase strategy is one thing, but measuring it is an altogether different issue. Tracking your repeat purchase rate isn’t a one-off deal: It’s something you have to continually optimize for.

Take, for example, Tea Forte, a luxury tea brand that boasts a wide assortment of loose-leaf teas and teaware. With both ecommerce and brick-and-mortar presences, the company has to cater to a diverse customer base with different needs.

Because much of its business is driven by holiday-fueled and gift sales, nailing down repeat purchasers is especially tough; turning one-time gift recipients into loyal customers is no small feat.

Yet in spite of those challenges, Tea Forte has seen 20 times the return on spending for its repeat customers, a clear indicator that repeat purchase strategy is thriving.

“When you look at the numbers, you can’t build a business entirely off of existing customers,” said Jurgen Nebelung, Tea Forte’s VP of Ecommerce and Digital. “There are many less expensive teas out there, but people choose us again and again because of the experience our products bring.”

By tying data and execution into the same platform, Nebelung and his team are able to create more segmented campaigns that deliver personalized messages to one-time customers with targeted content based on their purchase history, abandoned carts, email click-through rates, and more.

Even though focusing on a smaller segment of repeat customers may seem like minimizing the company’s chances to reach a broader audience, Nebelung says it’s been the key to their success—helping them build trust and loyalty in their brand.

CAMPAIGNS TO MAXIMIZE REPEAT PURCHASE RATE

Ultimately, repeat purchase rate should act as the barometer of your ecommerce campaigns’ success. Sure, you still want to keep an eye on metrics like customer acquisition cost (CAC) and customer lifetime value (CLTV). But because repeat customers make up the foundation of your most loyal and highest paying customers, the data surrounding their actions should take priority.

But first, how can you give your targeted campaigns the best shot at succeeding? In order to drive a higher repeat purchase rate, here are just a few types of campaigns you can take advantage of:

POST PURCHASE THANK YOU

In the grand scheme of repeat purchases, letting your shoppers know that you’re grateful for their business might not seem like a big deal. But don’t underestimate the power of a post-purchase engagement. These messages allow you to sustain customers’ interest in your brand and more easily encourage the next purchase—especially because post-purchase emails have better open and click-through rates than typical promotional campaigns.

Within these types of emails, you can opt to include a discount, solicit feedback in the form of a survey, or just say a simple thanks, as Allbirds does so well here. (Including a dancing sheep doesn’t hurt either!)

But regardless of which option you choose, personalizing the message to capitalize on those moments where customers have shown interest is essential.

From there, you can continue to engage your new customers through a series of nurturing emails that include relevant content and similar products to upsell them.

CART ABANDONMENT

They may be a tried-and-true marketing tactic, but there’s a reason why cart abandonment emails are talked about so much—they work!

Indeed, customers who initially abandon their carts but respond successfully to cart abandonment emails end up spending 55 percent more on their order. If that isn’t a surefire way to draw in repeat buyers, we don’t know what is.

Remember, these emails go to customers who already have some level of familiarity with your brand, so even in more low-effort campaigns that simply remind them to finish checking out, treat shoppers like you know them (and they know you). They already know your brand is great, so remind them why they can trust you.

We love how inviting the copy is in this cart abandonment email from Food52. From the subject line (“Your long-lost loves are waiting.”) to the easygoing CTA (something like “Buy Now” might be seen as too aggressive), the entire email strikes the perfect balance between urgency and delight.

LOYALTY PROGRAMS

Your most loyal customers are the pride and joy of your brand. What better way to thank them for being the epitome of a great repeat customer than giving them something in return?
Enter customer loyalty programs, which provide incentives for your best customers to remain loyal to your brand for years to come. By offering a specific perk after each purchase they make or action they take (you make the rules here), you’re giving them even more reasons to come back and shop with you again.

Sephora’s popular Beauty Insider program works for a myriad of reasons, and it’s not just because the perks themselves are appealing. With exclusive seasonal savings, deals on fast shipping, and access to free beauty classes, there’s a lot for customers to love.

The best loyalty programs foster a sense of allegiance, excited, and community, and Beauty Insider checks all of those boxes.

When it comes to customer loyalty, there are two types of actions you can build your reward program around: transaction-based and engagement-based.

  • Transaction-based

It may be easier to reward customers with discounts or free shipping based on their transactions. But if you’re only capturing transactional data—for instance, total number of purchases, types of purchases, and amount spent per transaction—you’re not getting the most complete picture of your customer. And if you’re only attempting to build customer loyalty solely based on past purchases, you’re missing out on more valuable ways to drive repeat purchases.

  • Engagement-based

If the main goal for your next campaign is to increase repeat purchase rate (and it should be!), consider rewarding engagement-based loyalty over purely transaction-based loyalty. When you give perks to customers for interacting with your brand in ways that don’t just involve purchasing—taking a survey, downloading your app, or following your brand on Twitter, for instance—you create a richer, more multi-dimensional brand experience. And perhaps more importantly, you show your customers that you see them as individuals, not as dollar signs.

NEXT STEPS

Now that you’re basically a repeat purchase expert, how can you execute on all of your newfound knowledge?

1. Approach your next campaign from a repeat purchase mindset. Create triggered emails that will not only deliver the right content to your customers at the time when they’re most likely to purchase again (a B2C CRM like Zaius is a great way to do this), but also provide incentives for them to shop with you in the future.

2. Use your campaign data more strategically to track your repeat purchase rate. You won’t know how you can improve if you don’t know what to improve on, so use the formula above to your advantage.

3. Take a step back and look at how your campaign performed, than optimize on that data. By understanding the customer lifecycle across different devices and channels, you can stitch together a more complete profile of each of your customer’s unique needs. From there, you can tailor your next campaign accordingly to let those personalization and customer loyalty strategies really shine through.

Next thing you know, your repeat purchase rate will be thriving—as will your customers’ loyalty to your brand.

FURTHER RESOURCES

Hungry for even more content about repeat purchases in ecommerce? Look no further than these Zaius resources, which dive even deeper into the tactics you can start implementing right now to get your repeat purchase strategy up and running.

4 Ways to Encourage Repeat Purchases in Ecommerce

Get detailed breakdowns and examples of how some of the top ecommerce brands are using repeat purchase campaigns to hook new customers.

Break Free from the Ecommerce Playbook

In this episode of The Empowered Marketer, a podcast all about marketing tactics for B2C marketers, hear more about how Tea Forte approaches turning one-time purchasers into loyal repeat customers.

Engineering the Repeat Purchase in Ecommerce

Watch this webinar recording from the repeat purchase experts at Zaius and Privy to get a big picture-view of repeat purchase rates and why they’re such an important component of ecommerce marketing.

INTERESTED TO LEARN EVEN MORE?

Want to learn how you can simplify the repeat purchase process? Discover the six keys to engineering the repeat purchase in this comprehensive guide.