Have you ever gone back to the same restaurant twice in one week? Or have you kept returning to the same store for all your shopping needs? If you said yes to the first or second question, you're already familiar with the concept of a repurchase rate.

This powerful key performance indicator (KPI) can help businesses maximize customer loyalty and revenue by measuring how often customers come back to purchase products or services. By understanding the repurchase rate, businesses can identify and use strategies that encourage customers to return more often.

What is a repurchase rate?

A repurchase rate (also called repeat purchase rate) measures how often customers return and buy from your business after their initial purchase. It's an excellent way to gauge customer loyalty – the higher your repurchase rate, the more loyal customers are.

A repurchase rate can be measured over a specific period, such as one week or a month, and then compared to previous periods. This exercise helps ecommerce businesses identify trends in customer buying behavior and take steps to increase repeat purchases.

How to calculate the repurchase rate?

To calculate your business's repurchase rate, determine how many customers bought from you in the given time frame.

Then, count how many of those customers also made another purchase after their first order. Divide the number of returning buyers by the total number of shoppers and multiply by 100 to get your repurchase rate.

Repurchase rate formula

Repurchase Rate = (Number of repeat customers / Total number of customers) * 100

For example, if you had 2,000 customers in April and 400 went on to make a second purchase in June, your repurchase rate would be 20%. Or, if 250 people bought from you last week but only 25 went on to make a second purchase the following week, your repurchase rate would be 10%.

By regularly calculating your repurchase rate, you can track brand affinity — and learn which strategies are working and which require tweaking. To automate your repurchase rate tracking, consider using a data analytics platform like Daasity.

Repurchase rate vs. retention rate - what's the difference?

The repurchase rate is the percentage of buyers returning to purchase from your business after making their first purchase.

The retention rate measures how many customers you have kept over a certain period, regardless of whether or not they made any subsequent purchases.

Here's a simple illustration. Say you own a retail store and sold 10 products during the first month. If 8 of those customers return to buy again in the second month, you have an 80% repurchase rate. And if all 10 of those initial buyers revisit your store within the next 6 months, then that's a 100% customer retention rate.

Retention and repurchase rates are both measures of customer loyalty, but they measure different things. Understanding the difference between them can help you craft more effective strategies to reduce your customer acquisition cost (CAC) and boost your customer lifetime value (LTV)

7 ways to improve your repurchase rate, minimize churn, and drive recurring revenue

Now that you understand what a repurchase rate is and how to calculate it, let's look at some strategies for driving customer satisfaction and long-term loyalty.

1. Offer incentives

People love a good deal, so incentivize customers to return by offering deals and discounts when they make repeat orders. These incentives include loyalty programs or points, subscription discounts, and other rewards.

For instance, if a customer buys a facial cream from your store, you could offer them 10% off their next purchase. This discount encourages customers to return and even recommend your products or services to others.

2. Make it easy for customers

Nobody likes complicated checkout processes – so make sure yours is as smooth and straightforward as possible. Provide your customers a secure payment gateway and ensure all payment options are visible.

It's also essential to provide customers with multiple delivery options so they can choose one that suits their needs. This initiative will enhance your customer experience and increase their chances of returning for more purchases.

3. Leverage social media

Social media is incredibly effective for spreading awareness about your products or services and encouraging repeat purchases. Use platforms like Twitter, Instagram, and Facebook to reach new customers, post relevant content regularly, and interact with customers in real-time.

You could also use social media to run promotions and contests that reward loyal customers for returning to your brand. These social media offers will give customers a reason to engage with your page and keep returning to buy from you. They will also help you build brand recognition.

4. Focus on customer service

High-quality customer service is essential for retaining customers and encouraging them to return. Ensure all your staff are well-trained in being courteous and providing helpful advice, as these will contribute significantly to creating a positive customer experience.

Also, consider introducing a customer service chatbot to answer simple queries - this will make it easier for customers to get the help they need.

5. Collect customer feedback

Collecting customer feedback is a great way to understand their needs and preferences so that you can tailor your products or services accordingly. The more engaged customers feel in the process, the more likely they are to return for future purchases.

Try asking your customers for their opinions via text surveys or focus groups, or set up an online forum for them to post their feedback. These feedback collection processes will help you gain insights into customer behavior and empower them to take the lead in shaping your products or services.

6. Analyze customer data

Data is a powerful tool for understanding customer behavior and predicting future purchases. By regularly collecting and analyzing customer data via tools like a CRM or attribution software, you can identify patterns and trends in their behavior and use them to optimize your offers accordingly.

Say you sell skincare products. Customer data from your Google Analytics reports or Emotive Attribution dashboards will help you know the exact products your target audience will likely buy again and when they'll do so. With these insights, you can create targeted campaigns with a higher chance of success.

7. Create a sense of community

The more customers feel connected to your brand and the people behind it, the higher their chances of returning.

Consider hosting events such as trade fairs or product launches so customers can interact with each other and get to know your team. These events will help you cultivate a solid customer base that keeps reordering your products.

You could also set up a rewards program or loyalty club so customers can collect points whenever they buy - and use them to claim discounts or other benefits.

Increase your repurchase rate with SMS marketing strategies

The repurchase rate is a powerful ecommerce metric for understanding your customers' loyalty and what strategies work best. And one effective way to guarantee returning customers is SMS marketing.

SMS lets you reach more customers, send personalized messages and take advantage of automated processes. Enter Emotive is an SMS marketing software that makes it easy for brands to create text campaigns, manage contacts, and track results.

With Emotive, you can quickly augment your marketing efforts with automated messages like welcome texts, promotional offers, and reminders. You'll also be able to collect data on customer behavior and gain insights into their shopping habits. Book a free demo today.