What is Your Repeat Purchase Rate?
Your “repeat purchase rate” or “repurchase rate” is the proportion of customers that have purchased from you more than once. After a customer purchases from you once, their completion of another, later transaction counts them as a repeat customer. Your repeat purchase rate can range from 0% to 100%, and the higher the percentage the better. A rate of 0% means that none of your customers are returning to purchase from you again, a rate of 100% means every customer comes back and makes another purchase.
Why Is Repeat Purchase Rate an Important Metric to Track?
Let’s start with the basics…New customer acquisition is so important, and earning a new customer requires a lot of work. However, if a new customer purchases your product once and never again, how much are they really worth to your business? Imagine if instead that same new customer starts purchasing your product once a month. Loyal customers are an essential part of successful eCommerce businesses.
Your repeat purchase rate is a key metric representing your customer retention efforts and is a great measure of loyalty to evaluate long-term performance. A healthy repeat purchase rate confirms you’re providing great value to your customers. Additionally, studies show that increasing customer retention by just five percent causes a company’s profitability to increase by an average of 75%!
Repeat Purchases and Lifetime Value
Repeat buyers are essential to spur lifetime value in the business. The more times you are able to get a customer to purchase from you again, the greater their potential lifetime value becomes. Repeat customers tend to make more purchases over time due to the development of brand trust, making them valuable for business success. This development of brand trust also makes your repeat customers more likely to purchase the more expensive products in your catalog.
What is a Healthy Repeat Purchase Rate on Amazon?
Repeat Purchase Rates will vary by category and niche, the more subscription or consumption-based products you sell, the higher your repeat rate should be. More durable, long-lasting products will tend to have a lower repurchase rate.
In general, the market agrees that a repeat purchase rate in the 20-40 percent range is viewed as successful. However, you know your industry and business best, so measure accordingly.
How to Track Repeat Purchase Rate
Calculating Repeat Purchase Rate for Amazon FBA sellers
If you’re not subscribed to a software such as myHorizons, you can calculate your repeat purchase rate manually. To find your repeat data, you will need to download a report from your Seller Central dashboard. If you’re not an FBA seller your calculations will be the same but you may need to reorganize your sales data to follow this process… The raw data you will need is found by clicking Reports > Fulfilment By Amazon > Amazon Fulfilled Shipments. Export the data. Unfortunately, Amazon only provides reports for one month at a time so you will have to consolidate the transactions into one file. Export as much historical data as you can, but at minimum, you will need enough data to cover one repeat purchase lifecycle. For example, if your customers typically repurchase every 2 months then you need at least 3 months of data. Once you have your appropriate combined data set you can extract the repeat customer info you need to calculate the repurchase rate. First, create a column with customer names and associated SKUs combined. Then create another column to count the instances of customers buying the same product. Then add another column combining SKU, customer name, and Shipment ID in order to identify if customer SKU purchases were from the same shipment or were distinct orders. Add another column to count the number of unique customer orders, identify and remove all nonrepeat customers. Then create an isolated list of all the repeat customers. Now you can calculate your repeat purchase rate by dividing the number of repeat purchasers by total purchases. You can also use your data to calculate your repeat purchase rate per product.
If you are an Amazon seller who owns a brand and participates in Amazon Brand Registry, then you will have access to Amazon’s Repeat Purchase Behavior report. This report shows Brand Owners the number of orders received for each of their products or brands and the number of unique customers who placed the orders. The number of orders may include multiple quantities of the product and may differ from ordered units. By comparing the number of orders with the number of unique customers, Brand Owners can identify products or brands that have been ordered more than once per customer during the specified timeframe. The report also shows the percentage of their customers out of total customers who have had repeat purchases during a specific time period. Finally, it indicates the ordered product sales from repeat purchases in the selected timeframe (returns are not reflected).
Tracking Repeat Purchase Rate with myHorizons
Seem complicated? We use our proprietary software to calculate metrics like repeat purchase rate automatically. Subscribers can access the “Repurchase Analysis” under the Business Analytics tab to view a full report on their repeat purchase rates. Learn more about myHorizons tools for Amazon Sales and Advertising Analytics.
How to improve Repeat Purchase Rate
Deliver a Great Customer Experience
The level of customer service provided by Amazon keeps customers happy. From fast shipping to free returns, Amazon knows what its customers value most. Amazon Prime also brings unique benefits to those who subscribe and rewards them with 2-day free shipping and discounts. Customers have come to expect the level of service Amazon provides from other retailers as well, and when other retailers can’t compete, loyalty to Amazon and Amazon Prime continues to grow.
Amazon also provides tools for brands to help provide great customer service. By enrolling in Brand Registry you will receive support from their team to help protect your brand. From here you can identify any unauthorized sellers of your product to ensure that sellers are limited to the distributors you know and trust…
Avoid Distribution Leakage
As a brand on Amazon, you play a key role in ensuring your customers have a positive experience with both your brand and your products every time. While you can actively control the experience your customers have when they purchase your products from you, this can be difficult when you have multiple distributors. It is extremely important that you are systematic with distribution and only work with distributors you trust. To ensure a positive experience for your customers you should only work with approved sellers who have committed to maintaining solid customer service and consistent pricing. Read more about how Amazon sellers should avoid distribution leakage.
Participate in Amazon Moments
While FBA sellers get the benefits of the unique customer service experience provided by Amazon fulfillment, Amazon vendors are able to show their appreciation for customers through Amazon Moments. The rewards fulfillment platform lets Amazon vendors reward shoppers for taking certain interactions with their brand through Amazon. Vendors are able to offer a reward in the form of a digital or physical gift, such as a health and beauty item, or digital content, for example. These small surprises are a great way to encourage Amazon customer loyalty and retention.
Practice Cross-Selling
Cross-selling on Amazon is a great way to re-engage customers and educate them on your other products. Read our post on cross-selling and purchase combinations to learn more about the best ways to cross-sell on Amazon.
Participate in Amazon’s Subscribe and Save Program
Amazon’s Subscribe and Save program essentially lets customers put their frequent purchases on auto-pilot, automatically purchasing and delivering select products to them every month, 3 months, or whatever time frame they select. Participating in Amazon’s Subscribe and Save Program could increase the likelihood and frequency of your repeat purchases. If your products are a good match for the program, theoretically by enrolling on subscribe and save you should expect to see your repeat purchase rate improve. Knowing which products are more likely to be repurchased will help you to decide which products are suitable for Subscribe and Save. However, you must also take into consideration that your customers get between 5%-15% discount for subscribing. You will need to see a significant increase in repeat purchase rate and sales volumes to account for the discounted sales price. If you are considering enrolling on the subscribe and save program then you need to understand current repeat purchase behavior to set a baseline. Then by tracking your repeat purchase rate over time and comparing your baseline to your results post-enrollment, you should be able to assess the effectiveness of Subscribe and Save and give you some idea on where performance can be improved.
Our technology, myHorizons, is a real-time marketing analytics and AI-powered advertising optimization platform. Built by our software developers, myHorizons enables our team and our clients to analyze profitability, optimize advertising, monitor consumer behavior, discover new opportunities, and make business decisions with confidence. Learn more about the many features and tools included in myHorizons on our technology page.
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