Repeat purchase, also called repeat sales, happens when your previous customers buy something from you again. This makes a repeat customer as valuable as new customers.

Sometimes repeat customers become more valuable since they might recommend your products to new customers, which can help you grow your customer base. Now, are you sure that your repeat customers are already enough to help your business grow?

You can answer this question by knowing your repeat purchase rate—also called repeat customer rate. In this article, we will help you learn everything there’s to know about the repeat purchase rate, repeat sales, and repeat customers. So, get ready!

Paying with mobile terminal

What Is Repeat Purchase Rate

The repeat purchase rate is one of the most important KPIs in small and big businesses. Why? Because it reflects how good your company is in encouraging consumers to make more than one purchase.

Forbes explained that the repeat purchase rate is the percentage of customers who make a second purchase. Many entrepreneurs don’t know the importance of repeat purchase in marketing because they tend to focus on potential customers.

In reality, knowing how good your repeat purchase rate is can help you make marketing strategies that can attract not only possible clients but also returning customers. Once other people realize you have lots of repeat consumers, they will be encouraged to try your products – leading to more customers.

The Formula and Calculation of Repeat Purchase Rate

Before you can identify how good your business is in enticing customers to make more than one purchase, you should learn how to calculate repeat purchase rate. To do this, you need to know the repeat purchase rate formula.

Calculating your business’ repeat purchase rate is easier than you think since it involves only four steps.

Let’s learn them:

  • Repeat purchase customer total: Tally the total number of return customers.
  • Customer total: Count the total number of customers that your business attracts.
  • Divide the repeat purchase customer total by the customer total.
  • Multiply the answer (quotient) you got by 100 to get your repeat purchase rate. 

The repeat purchase rate (RPR) formula should look like this: (Repeat Purchase Customer Total ÷ Customer Total) x 100 = RPR

Repeat purchase rate calculation

Assessing Your Current Repeat Purchase Rate

Now that you know how to compute your repeat purchase rate, it is time to determine if your business’ RPR is enough or not for it to have growth. Numerous studies stated that a good repeat customer rate usually ranges between 20% to 40%. 

However, customer loyalty program platform Smile.io clarified that RPR will depend on the industry your business is in.

Take a look at the suggested RPR for different industries below:

  • Electronics: 21%;
  • Jewelry & Accessories: 24%;
  • Beauty & Cosmetics: 35%;
  • Health & Supplements: 40%;
  • Clothing: 40%;
  • Food & Drink: 42%;
  • Pet Supplies: 52%.

The details above show that RPR will still depend on the products you are selling. Businesses in the electronics sector are expected to have a low repeat purchase rate since customers don’t always buy smartphones and other gadgets.

Entrepreneurs who offer pet supplies are expected to have the highest RPR since customers return for their products because they’re considered daily essentials. Pet owners also tend to choose the same brand that’s already tried and proven for their pets’ safety.

But, Meta CMO Alex Schultz said that if your business has a 20-30% repeat purchase rate, then you’re doing good. This means that your business is capable enough to retain customers.

Coins with different values

Factors Influencing Repeat Purchase Behavior

If you think your business’ RPR is low, then you need to know what’s driving customers’ repeat purchase behavior. Knowing important factors that could encourage repeat purchases can help you gain returning consumers, who could eventually become loyal customers.

Let’s see what these factors are:

  • Security: Security is one of the main factors that returning consumers consider since scammers and other malicious actors are becoming more rampant. Make sure that your business has robust payment security measures and offers transparent data privacy policies.
  • Convenience: Consumers love to return if their shopping experience is hassle-free and convenient. By ensuring fast delivery, various payment options, and an easy checkout process, existing customers will be confident to buy your products again.
  • Price: Many new businesses focus on gaining more money. But, if you’re just starting your business, you must focus on offering reasonable prices instead so you can maintain it and attract repeat buyers. Remember, your first goal as a new entrepreneur should be gaining customers’ interest and ensuring your business can continuously run. You may also consider using dynamic pricing to further increase your sales.
  • Discounts: One of the efforts you can do to leave a positive and lasting impression is to offer discounts. If you’re generating more than enough revenue, launch discounts. You’ll be surprised how customers will be flocking back to your business.

Last but not least: after sale service. Aside from selling your products, you must also ensure that your after-sale service is effective. Showing that your customer service cares–especially in times of need–can provide a positive customer experience.

Improving Customer Retention and Loyalty for Repeat Purchases

All businesses will start with customer acquisition tactics to attract new consumers. If your company’s client acquisition strategies are already efficient, then you need to start improving your customer retention rate.

Most statistics revealed that customer retention covers a significant portion of business earnings: 61% in small companies, 84% in customer experience-focused firms, and 35% in small ecommerce.

Since return customers can greatly increase your sales, it is important to know what customer retention strategies you should implement.

Strategies for Increasing Your Repeat Purchase Rate

Enhancing your business customer retention can help you ensure future purchases because repeat consumers are more likely to buy your products/services. Let’s see the chances of customers buying your product again after their first, second, and third purchases.

A consumer has a 27% chance of buying another product or service after their first purchase.

Consumers have a 49% chance of purchasing from you again after their second transaction.

The repeat purchase chance can increase up to 62% after your customers make their third purchase.

Based on the information above, the longer consumers purchase from your company, the higher their chances of ordering again. This can drastically increase your average order value, leading to more sales.

Their repeat purchase activities don’t only influence their likelihood to buy from your business. They will also likely be encouraged to spend more. In the beauty & cosmetics sector, it was revealed that consumers are likely to increase their spending by 30% after every purchase.

This is why it is important to know how to encourage repeat purchase behaviors of your customers. To help you, here are repeat purchase rate measures you must follow. 

Loyalty Programs

To make your repeat consumers the most loyal customers of your business, you need to offer a loyalty program.  It is one of the most effective marketing efforts to attract repeat buyers. A loyalty program will remind customers that they really matter.

To achieve a great loyalty program, you must do the following: 

  • Offer rewards whenever repeat customers for certain actions, such as participating in surveys, visiting physical stores, etc.
  • Always engage with consumers online or in person.

Also, don’t forget to ensure specialized customer experience.

Discounts and Promotions

Offering discounts and promotions is also among the most efficient marketing strategies when improving your repeat purchase rate. You can encourage first-time buyers to become repeat customers by providing them with these perks every time they make new purchases.

Although discounts & promotions have high marketing costs, the benefits you can acquire are truly worth it.

Great Customer Engagement Practices

Repeat customers want businesses to make them feel they matter. This is why they tend to engage with their favorite companies, especially online. You, as a business owner, must respond to them by engaging in a timely and energetic manner.

Here’s the customer engagement habits you can practice:

  • Mention your repeat customers on social media platforms.
  • Ask them to refer their friends.

Last but not least, reply to their reviews about your services and products.

Satisfaction Surveys

Customer feedback not only allows you to know if your customers are satisfied. It can also make them feel that you care by asking about their experience.

You can send satisfaction surveys each month or once a year to let them know that you’re making efforts to give them a satisfying experience.

Consistent Transaction Email Improvement

Some businesses tend to forget the importance of transaction emails since these usually contain only the purchase order. But, marketing experts revealed that improving transaction emails can convert previous purchases into new sales. 

You can do a lot of things in your transaction emails. These include thanking customers for trusting your business, promising that their orders will arrive on time, and including product recommendations.

Frequently Asked Questions

Why is it good to have repeat customers?

Repeat customers can increase your average sales, especially during holiday marketing events. They might also refer your products to other customers who haven’t purchased from your business.

What is the value of a repeat customer?

Repeat customers are valuable since they can increase your profits by 25% to 95%.