Repeat order rate – an introduction
Repeat order rate is the proportion of customers that have purchased or shopped more than once. It’s also referred to as ‘repeat customer rate’ or ‘repeat purchase rate’.
What is repeat order rate?
Repeat order rate is a metric focusing on customer loyalty which determines the proportion of your customers that have purchased more than once in a defined period of time. The period is typically looked at monthly, but yearly, weekly and even daily can also used.
Why is repeat order rate so important?
Tracking repeat order rate allows you to understand customer buying patterns, and ultimately, the loyalty of your customers. It’s common knowledge that existing customers are more valuable than new ones. Typically, their AOV (average order value) is higher and their CAC (customer acquisition cost) is lower, which generally means repeat customers have better unit economics. Tracking repeat customers and the metrics surrounding their behaviour can be extremely valuable.
It may also be worth looking at other metrics that focus on customer satisfaction as happy customers are more likely to return and contribute to strong unit economics and increase LTV (lifetime value).
Some data for e-commerce businesses demonstrate that as little as 10% of customers who are repeat customers could account for as much as 40% of revenue.
Once you get a customer to ‘repeat’ the percentage of those that ‘repeat’ again jumps up too.
How do you improve your repeat order rate?
How you automate and make sure your marketing lifecycle is seamless is crucial in boosting repeat order rates.
- Build and segment your email list: stay top of mind with personalised emails – curating content and products relevant for customer segments or even individual customers.
- Develop a customer loyalty program: everyone loves an incentive, and it’s a great way to encourage customers to buy from you rather than competitors.
- Showcase your reviews: product pages with reviews convert better than those without.
- Deliver a frictionless customer journey: focus on customer experience along the entire journey – from initial order, confirmation, shipping journey, post order experience and even returns. A great experience will delight customers who will be more likely to repeat.
Improving the repeat order rate will be unique to your business, so you will need to do the analysis on your data to get the timing and messaging right.
Post-transaction emails can help as well. It’s an opportunity to push related products. Make the content more engaging by developing a post around the subject matter too.
What does repeat order rate look like?
How do you calculate repeat order rate?
The formula to calculate repeat order rate is:
Repeat order rate = No. of repeat customers in period / No. of customers in period
Repeat order rate worked example:
If a company has the following, it’s repeat order rate for June can be calculated like this:
- Customers in June that have bought before: 3,000 customers.
- Customers in June: 8,000 customers.
Repeat order rate = 3,000 repeat customers / 8,000 total customers = 37.5%
Repeat order rate is an important metric to monitor and track as by understanding this, including the timing and frequency allows you to consider targeted marketing to re-activate customers. Knowing that repeat customers are more loyal and more likely to repeat-buy multiple times allows you to capitalise on this valuable customer behaviour.