How To Calculate and Improve Your Repeat Purchase Rate. Tips and Strategies

Repeat purchases, also called repeat sales, are when your previous customers buy something from your online business 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, helping grow your customer base. All Filipino businesses want to improve repeat purchases.

The first step is to learn the critical metric – the RPR. Your repeat purchase rate – also called repeat customer rate – will serve as your measuring stick for this campaign. This article will teach you everything about the repeat purchase rate, repeat sales, and repeat customers. 

So, get ready!

What Is Repeat Purchase Rate

The repeat purchase rate is one of the most important KPIs in any Filipino business. 

Why? Because it reflects how well your company can encourage 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 purchases 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 attract both possible clients and returning customers.

Once other people realize you have many repeat consumers, they will be encouraged to try your products, leading to more customers.

The Formula and Calculation of Repeat Purchase Rate

Before everything, you should learn how to calculate repeat purchase rates. 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:

1. Repeat purchase customer total. Tally the total number of return customers.
2. Customer total. Count the total number of customers that your ecommerce business attracts.
3. Divide. Divide the repeat purchase customer total by the customer total.
4. Multiply. 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

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’s RPR is enough for growth. Numerous studies have stated that a good repeat customer rate usually ranges between 20% and 40%. 

However, the 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.

This is because customers return for their products. After all, we Filipinos love our pets. And these products are considered their pets’ daily essentials. Pet owners also tend to choose the same brand that’s already tried and proven for their pets’ safety.

However, Meta CMO Alex Schultz said that if your business has a 20-30% repeat purchase rate, then you’re doing well. This means that your FIlipino business is capable of retaining customers.

Factors Influencing Repeat Purchase Behavior

If you think your online 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 the most common factors affecting the repurchase rate.

• Security. Scammers and other malicious actors are becoming more rampant. Thus, make sure that your online business in the Philippines has robust payment security measures with 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 confidently return.
  
• Price. Focus on offering reasonable prices to maintain and attract repeat buyers. Remember, your first goal as a new entrepreneur should be gaining customers’ interest. Then, you ensure the continuity of your e-commerce business. You may also consider using dynamic pricing to further increase your sales.

• Discounts. Offer discounts to leave a positive and lasting impression. If you’re generating more than enough revenue, launch discounts. You’ll be surprised how customers will flock 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% of small companies
• 84% in customer experience-focused firms, and
• 35% in small ecommerce.

Since returning customers can greatly increase your sales, it is important to know what customer retention strategies to implement for your Filipino ecommerce business.

Tracking and Analyzing Your RPR

Knowing your RPR isn’t really all that useful for your online business if you’re not tracking metrics. Numbers are useless without context.

Even if you already have your RPR, what then? Do you know if you’ve improved? Are you in a good place? What can you do with it?

If you want to make full use of this important metric, you must track and analyze it.

This means monitoring how often users come back to buy over time. You’ll also compare this with historical data and then figure out buying habits and patterns. This information is actually useful compared to just having raw data.

How to analyze repeat purchase rate? The next sections will explain it in more detail.

Key Metrics to Monitor

By now, you already understand the importance of RPR.

But RPR should never be taken alone. You must view it with other numbers. These metrics provide a more holistic insight into your customers’ behavior.

Here are the most important ones and where to find them.

• Purchase frequency. This is how often customers make purchases over a specific period. Find this in Google Analytics or customer relationship management (CRM) tools.
• Customer Lifetime Value (CLV). Calculating customer lifetime value gives you the total revenue a customer will have for their entire relationship with you. It’s calculated using sales data from your e-commerce platform.
• Average Order Value (AOV). The average amount spent each time a customer places an order. Find this in your sales reports or analytics tools.

These metrics provide insights into customer behavior and spending patterns, more than simply just having RPR. Through these metrics, you make more informed decisions about your retention strategy.

Tools and Techniques for RPR Analysis

If you want to improve your numbers, you better have the right tools and techniques. You can’t possibly gather all the information and analyze it with your mind alone. We Filipinos are smart, but not that smart.

Thus, here are some essential tools and techniques for RPR analysis and where you can find them.

• Google Analytics. This platform tracks customer behavior, including repeat visits and purchases. To understand repeat customer trends, check out functions like “Cohort Analysis” and “Customer Retention” reports.
• Customer Relationship Management (CRM) Software. CRM tools manage customer interactions and data for as long as you’re dealing with them. Track customer purchase history and engagement levels to identify loyal customers. Then, tailor your approach.
• E-commerce platform analytics. The best ecommerce platforms offer built-in analytics, such as NEXT BASKET. These analytics suites will be integrated into your e-commerce dashboard. Through their advanced functionalities, you won’t have to go far to analyze RTR, AVO, and customer lifetime value.
• Loyalty program platforms and strategies. These tools and platforms make it easy to reward customers for repeat purchases. Use tools like NEXT BASKET, with cutting-edge loyalty program features. Use them to implement a points-based system or tiered rewards as incentives.

These tools and techniques let you gain actionable insights. Add these to your arsenal for building stronger customer relationships for your online business in the Philippines.

Using Insights to Refine Your Strategies

Through all the data collected and utilized from your tools, you can draw deep insights that you can use to refine your strategies.

Insights are unique information derived from relevant data, with the potential to improve your business strategies. The main purpose of gathering data should be to draw insights. This will help you.

• Recognize what keeps customers coming back and what drives them away.
• Tailor your marketing efforts to match customer preferences.
• Improve inventory management, product offerings, and customer service.
• Create strategies that foster long-term relationships with your customers.

Say you’re an eco-friendly Filipino lifestyle brand, and you notice that repeat purchases are lower than expected. What will you do?

You look at your data, then crunch the numbers from your tools. You even look at customer reviews and surveys. From this, you realize that customers love the concept but are unsure about the product’s quality.

From this insight, you provide more detailed descriptions, usage tips, and benefits on your product page. These insights-driven measures build trust and increase repeat purchases.

By understanding your customers and adapting your approach, you improve online business metrics.

Strategies for Increasing Your Repeat Purchase Rate

Enhancing your business customer retention ensures future purchases.

Repeat consumers are more likely to buy your products and services. Research has revealed the chances of customers re-buying 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.

The longer consumers purchase from your online store, the higher their chances of ordering again. This can drastically increase your average order value, leading to more sales. 

Their repeat purchase activities also make them likely to spend more. In the beauty and cosmetics sector, 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 in your customers. To help you, here are repeat purchase rate measures you must follow. 

Implement Effective 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 methods to improve customer retention.

A loyalty program will remind customers that they really matter. Also, Filipino consumers are huge deal seekers. We all love good deals, and loyalty programs are a sure way to their hearts.

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

• Offer rewards whenever repeat customers go 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 a specialized customer experience.

Reward Repeat Customers With Points Or Discounts

This is one of the most efficient marketing strategies to improve repeat purchase rate. You can encourage first-time buyers to become repeat customers by providing them with discount perks for new purchases.

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

Offer Exclusive Benefits for Loyal Customers

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.

• Reach out and offer exclusive benefits for your most loyal customers.
• 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. After all, most usually contain only the purchase order.

Nevertheless, 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.