Repurchase Rates

In the fast-paced world of e-commerce, the importance of understanding your customers' behavior cannot be understated. With hundreds of metrics available to decision-makers, one crucial metric that often doesn't get enough attention is the repurchase rate. It's a KPI that can (and should) effectively be driving your marketing strategy. But what exactly is it, and why does it matter? In this edition of the "So What?" series, we dive into repurchase rate, exploring how this metric can guide your e-commerce marketing efforts.

The "So What?" Series: Bringing Strategic Analytics to Life

Before we delve into the world of the repurchase rates, let's briefly introduce the "So What?" series. In this series, we bridge the gap between data analytics and actionable insights. We believe that data is not just about numbers; it's about strategic thinking. You have an interesting KPI and a pretty dashboard, so what? In this series, we turn our analysis from “interesting” to “actionable” and bring strategic analytics to life.

What is Repurchase Rate?

Repurchase Rate measures the percentage of customers who return to make a second purchase within a given time frame, typically between 90-180 days of their initial one. While 90 days is a standard interval for analysis, choosing the right interval may come down to industry or vertical.

So What? Making Sense of Repurchase Rates

A company's repurchase rate doesn't often change over time; it often won't change more than 10% or so, even given a company's best efforts. So then what is it telling you? Your repurchase rate is indicative of the types of customers you attract and the best way to structure your marketing strategy to grow your business. Below, we'll focus on two marketing strategies, referral programs and loyalty programs.

Acquisition Mode (1-15%):

• When your 90-day repurchase rate falls within the 1% to 15% range, it obviously signals that customers are not returning to your store after their initial purchase. This indicates that you should be focusing your marketing strategy on customer acquisition. If customers aren't repurchasing your products, it'd be a waste of resources to push loyalty or retention bonuses on them. Even your satisfied customers may not be interested. Instead, consider redirecting resources toward referral programs. Empower your existing customer base to become advocates for your brand, expanding your reach in a cost-effective manner.

Hybrid Mode (15-30%):

• Landing in the hybrid mode signifies a balanced scenario. A 90-day repurchase rate between 15% and 30% indicates a moderate level of loyalty alongside opportunities for growth in both acquisition and retention efforts. This juncture calls for a thoughtful strategy. Continue your pursuit of new customers while simultaneously nurturing brand loyalty among existing ones. Loyalty programs should come into view, but their impact on the 90-day repurchase rate deserves careful evaluation.

Loyalty Mode (30%+):

• If your 90-day repurchase rate soars beyond the 30% threshold, you've achieved a commendable level of customer retention. Now, it's time to shift your focus toward maximizing customer lifetime value. Achieve this by introducing loyalty programs and targeted retention campaigns. Prioritize the delivery of exceptional customer experiences to solidify brand loyalty, as these satisfied customers are most inclined to become advocates on your behalf.

How do I Calculate Repurchase Rate?

To calculate your 90-Day Repurchase Rate, count the total number of first-time purchasers within a given time frame. Then count how many of those purchasers made an additional purchase within 90 days of their original purchase.

SeedMetrics offers decision-makers access to real-time KPIs such as the 90-Day Repurchase Rate. Try our free demo to see what that looks like for your business.

Dive a Little Deeper :

Try tracking your repurchase rate by product or by customer segment. What products are driving repeat customers? Which of your customer segments are coming back to purchase additional products?

We'd love to dive into this analysis with you. Book a demo with SeedMetrics and let's explore how data can drive your success.

Stay tuned for future insights in our "So What?" series, where strategic analytics comes to life.