All You Need To Know About Repeat Customers

repeat customers

You may already have heard about returning customers. But what about repeat customers? Are these 2 the same type of customers? Statistics show that only 8% of customers are repeat customers, but they make up for 40% of ecommerce revenue.

In this article, we will explain about who repeat customers are and their importance, some average rates and a formula that you can use to estimate how your brand is performing, as well as 6 ways to get repeat customers.

I. Repeat Customers And Their Importance

1. What are repeat customers?

To put it simply, a repeat customer is one who buys twice from your store (or more!). Normally there’s no time limit for the purchase, so someone can be a repeat customer if they made their purchases years apart.

2. Why are repeat customers important to your business

Customers who return spend more on each purchase.

Repeat consumers not only convert more frequently, but they also have a greater average order value than first-time buyers. This suggests that your repeat customers spend more each time and buy more frequently from you!

why repeat customers are important

At important times, repeat consumers spend more.

Most ecommerce businesses generate the majority of their revenue during a single peak season. If you sell bathing suits, March and April are peak months. If you sell fun costumes and theme-based outfits, October will be the most profitable month for you.

However, the busiest period for most retailers is between BFCM (Black Friday – Cyber Monday) and Christmas, since this is the holiday rush and people’s spending level are usually the highest, especially for repeat customers.

It’s easier to sell to a recurring consumer.

A comparable study by Adobe looked at the conversion rates of repeat consumers. They discovered that a customer who has made two previous purchases with your store is 9 times more likely to convert than a first-time shopper.

A repeat customer is more likely to return to your store.

I get what you’re thinking—it seems self-evident. A repeat client, after all, is defined as a site visitor who has made at least two purchases. What’s interesting, however, is that as an existing customer’s purchase volume increases, they’re more likely to buy from you again.

3. Repeat vs returning

You would see a repeat customer buying from your store repeatedly, but it can be spreaded out in a long timeline, as long as it’s repeat business. They can be going to your store everyday for groceries or for daily supplies. A returning customer would be someone who has bought once from your business, and returned for a purchase.

Repeat customers

Your ultimate goal would be to convert a visitor into a paying customer (or an existing customer), and then turn them from returning customer to a repeat customer – which will be the most loyal segment in your customer base. Increasing customer retention, therefore, is highly essential.

II. Repeat Customer Rate

How to calculate repeat customer rate

To calculate the Repeat Customer Rate, you can take the number of people who have already purchased from you at least twice and divide them by the total number of your customers, and multiply it by 100 for a percentage. Of course, it’s up to you to set the time frame; you can be calculating it weekly, or monthly, etc.

[ Number of customers already purchased before/ Total customers ] *100 = Repeat customer rate

A good repeat customer rate varies between 21% and 37% after a ResearchGate as it depends a lot on your business industry, the nature of your business and the product you’re selling.

If you’re a small business with cheap and expendable product lines, you’ll more likely have a better repeat customer rate than someone who sells sophisticated and expensive products for long-term use.

It’s highly advised to maintain a good balance between encouraging your existing customers to make a purchase and acquiring new ones.

The pros and cons of Repeat Customer Rate

The pros of Repeat Customer Rate

Returning customers are more likely to convert than new consumers, so tracking the Repeat Customer Rate can be really helpful for your business. What is holding your customers back from making another purchase?

It’s much less expensive to get repeat customers than it is to find new ones, especially in a world where marketing and ads costs are rising constantly. So for small businesses, this can be a great method of decreasing costs.

Within your loyal customer base, upselling and cross-selling are more feasible. Furthermore, because repeat consumers are less likely to abandon things in their carts, you won’t need to send them cart abandonment messages. In other words, your loyal customers are considerably more likely to convert time after time.

Your finest advocates are repeat customers (at least those of the most driven and vociferous among them). As company trust has weakened, word-of-mouth marketing has become increasingly vital. Repeat customers promote your business without needing encouragement from your business itself.

Hubspot discovered that 83 percent of customers prefer the advice of friends and family rather than business advice. In this context, having your most devoted clients rave about you in front of their friends is more effective than any advertising campaign, and can contribute significantly to your business’ success.

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The cons of Repeat Customer Rate

However, this metric is only one of the indicators of your business health, so you shouldn’t take it too seriously if it seems irrelevant to your store. Sometimes, a low repeat customer rate might not be a bad thing if your new customer acquisition rate is off the roof.

Customer retention is the foundation for measuring other critical business growth KPIs. Customer lifetime value, for example, is a significant growth statistic that reflects how long a customer will stick around and how much they will spend on your products. It can assist you in developing client personas that will guide your acquisition and growth strategy.

Net Promoter Score, a qualitative measure of how likely customers are to suggest your business to friends and family, requires returning customers. Customers are unlikely to refer you to others if they do not wish to buy from you.

Customer retention affects other KPIs such as churn rate, repeat purchase ratio, and loyalty rates.

Pros and cons of repeat customer rate

III. 6 Ways To Get More Repeat Customers

Now that we have agreed on the importance of repeat customers, let’s see what businesses should do to attract and retain them.

01. Outstanding customer services

The customer-centric approach has been proving its effectiveness in retaining customers during this era, where products from competitors can be quite similar and less cutting-edge.

Take Starbucks as an outstanding example for having great customer service. They strive to establish a near personal relationship with their customers and ensure that customers stay loyal to the brand. Small actions like asking for customers’ names and writing them on cup orders, or allowing them to customize the drink recipes are some of the most common strategies that the coffee brand uses to deliver high quality customer service, ensure customer satisfaction and happiness.

As a result, Starbucks’ customer retention rate in the first half of 2021 was impressive. An average of 21% of Starbucks visitors return within 3 days, while 16% return within 2 days, and 10% within 1 day.

Starbucks customer retention rate

Source: Gravy Analytics

One of the most effective methods for online stores to improve their customer service is to use chatbots. Implementing this “round-the-clock”, digital supporters can ensure that customers get a quick response at any time during the day, regardless of their timezone.

In addition, using chatbots to answer simple, predefined questions will reduce the workload for customer service teams, so they can get to the more complicated questions and give detailed answers and solutions to assist customers.

Beside quick responses and detailed answers to their questions, ecommerce companies can also offer live demos, training, webinar, etc. to make customers become more familiar and comfortable with your products. As a result, they will feel safer, more satisfied, and have a more strengthened trust towards the brands. These ultimately will result in a higher rate of repeat customers.

02. Extensive product education

Product education, especially for more complicated products, are essential in order to facilitate the decision making process of customers. Without thorough understanding and knowledge about a product, people will be less likely to make an investment. They need to know what they will get should they decide to purchase the product or service. Understanding the features and benefits of the product, as well as the assistance during the whole process, people will be more likely to convert and stick with the brand for a longer time.

To educate your customers about what you have to offer, consider:

  • Designated onboarding process to get visitors to be familiar with the brand, as well as the product
  • Comprehensive channels, including social media, live chat, blogs, etc., ready to assist customers any time they have questions
  • Tutorials and demos so people can have a better understanding of what they are going to have or how they will use the product
  • Frequent conversations to connect and educate customers

Educating customers about the brand and the products should not be a brief, one-time investment. Letting them know that there is an active and enthusiastic relationship between the buyer and seller can be extremely beneficial and should not be overlooked.

03. Customer loyalty program

The core of loyalty programs are to make customers feel special, valued, empowered, and connected with the brand. And when you have a strong and deep connection with someone or something, it’s likely that you will stick with them and keep coming back over and over again.

To increase the repeat customers rate, companies can include these perks to their loyalty programs:

  • Offer exclusive rewards: Starbucks’ loyalty programs include recurring drinks or points that loyal customers can accumulate and redeem to add-ons or merchandise. This also creates a continuous loop, as customers make a purchase, collect the points, then come back to redeem it and repeat. For both sides, this is a win-win situation.

Starbucks rewards program

  • Give them a head-start: have perks that are easy to redeem right away, or extra points for new customers joining the program, so that they are encouraged and motivated to make more purchases.
  • Make it interesting and creative: the more enjoyable a program is, the more effective it is in increasing the number of loyal customers. Create a unique name for your loyalty program and points, such as Starbucks’s Rewards Program with Stars currency, or the beauty brand Pixi’s VIP Rewards that lets customers collect “Pixi Dust”

Pixi Rewards Program

04. Discounts and incentives to repeat customers

Everyone loves discounts and perks, so offering them to a repeat customer can be a quick way to get them coming back and eventually become a repeat customer. However, make sure you align this strategy with your business’ budget to sort out all the details and not cause a problem for your balance statements. One way to do this is offer discounts to new customers after making their very first purchase to nudge them in and stick with the company.

05. Collect feedback and update product

We start to see that people tend to stick with the brand for much longer and become repeat customers if they find that the products meet their needs, the experience is personalized, and that they are valued. A proactive approach to collect feedback from customers can help you anticipate and monitor the trend in customer shopping behaviors, identify the areas and aspects for improvements, and ultimately, not only retain old customers, but also acquire new ones.

You can collect the information and customer feedback from multiple sources, from live chat, social media, to messages and comments. Once you have collected the customer data, make sure you remember it. This will show that you care about the customers and strive to provide personalized experiences and build connections with them.

Once you have the raw data, make sure you analyze it for a deeper understanding of customers and their relationships with your brands and products. This is a valuable resource for your business to improve and upgrade products. As a result, what you offer can be exactly what they need. This might sound complicated, but once you start decoding the trend, the benefits are immense!

06. Add value through email marketing

email marketing

It’s undeniable that email is still a great way to convert customers and retain them. Just a few twists and turns can make your emails become a great method for creating repeat customers. Consider sending information about related products in your order confirmation email, or add other values to it. This way, customers are cared for and assisted even after the sale stage. This surely keeps them with the brand for much longer.

You can also send follow-up emails, or emails about a new release or update. Therefore, customers can feel connected and updated on the brand and their latest offers. Just make sure to not bombard them with tons of emails, because obviously, no one wants to receive 20+ emails from the same brand every day trying to sell something.

Conclusion

Repeat customers are undeniably, one of the most important customer segments of any brand. They are the ones to return to your online store the most, and usually spend significantly more than first time customers. This type of customer is also more likely to make a purchase, so eCommerce brands can cut down on the investments and costs to convert a website visitor into paying customers.

There can be different marketing efforts to acquire and encourage repeat customers. Not everyone can, and should implement all of these strategies. However, choosing the suitable actions and combination of methods for your business can increase your revenue and profit considerably.

So stop overlooking repeat customers and really invest in building a strong relationship and keep them remain loyal.

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