What is Repeat Customer Rate?
As an ecommerce marketer, you clearly have a lot to think about. The market is ever-changing; you have to keep up with the latest trends in the industry and have to alter your marketing strategy to stay on top of the game. Not to forget the tough competition from Amazon as they continue to target your once loyal customer base. No easy task, this one.
Take heart, there is good news! There hasn’t been an even better time for marketers to be in the ecommerce space than now. The pandemic has steered the buying behavior towards online shopping. Ecommerce sales in the U.S have reached new highs and have increased by more than 30% in 2020.
This substantial growth also means that competition is proportionally high. Earning customer loyalty is the need of the hour. You know what they say - your competition is just a click away.
Every store can largely differentiate their customers into 2 categories - new customers and repeat customers. A repeat customer is someone who has shopped twice or more from your website and is probably smitten by your product or service.
The Repeat customer rate is a go-to KPI for ecommerce marketers. It tells you what percentage of your customers are returning to your store to shop again after they have made their initial purchase - gotta love these customers!
How to calculate the Repeat Customer Rate?
Your online store’s RCR tells you how strong your customer base is and if your marketing efforts are leading to improved customer loyalty.
Calculating Repeat Customer Rate is fairly simple and straightforward. You’ve got to gather two pieces of information.
a) Number of customers who have purchased from your store twice or more.
b) Number of paying customers, that is those who have made at least a one-time purchase from your store. This leaves out those who have registered with your website but failed to make a purchase.
This is the formula you need to arrive at your RCR:
Repeat Customer Rate = Total of Repeat Customers / Sum total of Paying Customers x 100.
Why should repeat customer rate matter to ecommerce business owners?
You would have heard it time and again that it’s cheaper to retain existing customers than it is to find new ones. This holds true for a lot of companies including those in the ecommerce businesses. New customers are hard to acquire. Statistics show that it costs 5 times more to acquire a new customer than it takes to keep an existing one, aka the repeat customer.
Have you noticed an increase in your digital advertising spends? Are you shelling out a lot more in generating leads and traffic to your online store with the hope of gaining new customers?
It's estimated that advertisers will show a 39% projected increase in Facebook spendings alone in the next three years. All the more reasons why your ultimate goal shouldn’t be all about acquiring new customers.
Focus more on how you can get the new customers to come back for a 2nd purchase at your store. Repeat customers usually end up spending thrice as much as they did on their first purchase, and the likelihood of them coming back for a third run is 45%.
Calculating the repeat customer rate helps online sellers to:
- Gauge the likelihood of their customers returning after their first purchase.
- Understand if their efforts at customer retention are effective.
- Measure customer loyalty.
How to improve the repeat customer rate for your ecommerce store?
Here are a few tips on how you can convert existing customers into loyal customers and improve your repeat customer rate:
1. Offer excellent customer service: Allow your customers to connect with your brand. Your brand’s performance depends on factors such as timely delivery, quick responses to queries, and the actions you take on customer reviews and suggestions. Let your customers know that they are valued.
2. Connect with your customers through emails: Send engaging emails. Emails are a sure-shot way of building a relationship with your customer after making their first purchase. The email content should enhance your customer’s experience and make them come back for more.
3. Start a loyalty program: Create a loyalty program that lets your best customers earn points and rewards for every purchase they make, giving them reasons to return to your online store.
Another sure-fire way to have your customer come back for more is to keep them happy with excellent customer service. How you ask? We’ve got you covered. Sign up for DelightChat’s Customer Support tool today and never miss out on a customer query again.