Our Five Key Points:

  1. The repurchase rate shows how many customers came back to buy from you again after their initial purchase.
  2. Repurchasing only counts within a specific timeframe, usually no more than a year.
  3. Calculating the repurchase rate is simple when you have complete data about your sales and returning customers.
  4. You can use your repurchase figures to hone marketing campaigns, increase customer loyalty, and understand the customer lifecycle better.
  5. Using a data integration platform like Integrate.io empowers e-commerce businesses to maximize their business data to drive repeat purchases.

As an e-commerce retailer, which business metrics matter the most to you? Net revenue? Business growth? Conversion rate? All these KPIs are important, but there could be one critical e-commerce metric you’re overlooking: The repurchase rate. All e-commerce business owners worry about how many units of their products or services they’re going to sell, and how much revenue they’ll make. It turns out that focusing on existing customers could be the key to increased long-term revenue. In this article, we look at why your e-commerce business’s repurchase rate matters, how to calculate it, and how thorough data integration through a platform like Integrate.io helps.

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Table of Contents

  • The Repurchase Rate Explained
  • Calculating Your Repurchase Rate
  • Using Your Repurchase rate
  • Repurchase Rate and Customer Acquisition 
  • Increase Repurchase Rate with Integrate.io

The Repurchase Rate Explained

The repurchase rate is a metric that shows how many customers come back and buy from you again within a certain timeframe from their initial purchase. We’re not talking about adding additional items to their original order. They’ve bought from you, gone away, enjoyed their products and services, and come back for more.

Why is your repurchase rate important? Because the higher it is, the better your business is performing. E-commerce data from RJ Metrics shows that repeat customers may spend as much as 300% more than new customers. It’s clear that unless your key products or services are only available as a one-time purchase, you want your customers to come back multiple times. If you don’t concentrate on nurturing your existing customers, then every sale has to come from a first-time buyer, which means constantly focusing your marketing campaigns on finding new leads. This isn’t sustainable for most business models. Your repurchase numbers can indicate how many of your customers are loyal and willing to buy with you again, showing how much effort as a business you need to channel into improving your existing customer relationships.

Repurchase rate may also be called repeat purchase rate, customer retention rate, or even reorder rate. The important thing to know is that it revolves around customers coming back for more of what you offer.

Read more about boosting repeat purchases through your online stores via loyalty programs and other techniques on the Integrate.io blog here.

Calculating Your Repurchase Rate

Your repurchase rate formula very much depends on the timeframe that it’s important for you to have resales in. If you provide a B2B managed service, such as tech support, you may work on a subscription-based business model. Repurchase rate may not be as important a KPI to you – although it will be helpful for you to understand how many customers renew their subscriptions and why some might not.

If you provide household goods, you might expect customers to come back once a year, when they need a refresh of their home. If you’re an online food and drink retailer, you might be hoping for repurchases within the month. For an example repurchase rate formula, let’s go with wanting customers to come back within a year. In that case, this is how you calculate your repurchase rate:

Number of customers who made more than 1 purchase in 365 days / Total number of customers in the same 356 day period

So, if you have a total of 1000 customers, and 375 of those come back to you for more goods or services within the same year, your repurchase rate is:

375/1000 = 0.375 or 37.5%.

Essentially, you can quickly see that over a third of your customers are happy to buy from you again.

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Using Your Repurchase Rate Data

Your repurchase percentage, combined with other key business data, can help you identify several key pieces of information about your e-commerce venture:

  • Which products or services are popular and why?
  • What demographics in your customer base come back for repeat sales?
  • Do you have products or services that don’t meet customer expectations, thus affecting customer loyalty?
  • What’s the purchase frequency (PF)?
  • How long does it take for a customer to repurchase (time between purchases or TBP)?
  • What aspects of the sales journey impact the overall customer experience?
  • Do you need to improve your post-purchase customer service?

Answering these questions can help you adjust your offerings to meet customer needs, and understand how often your customers wish to engage with you as a company. This helps you boost your bottom line by optimizing the opportunities for repeat purchases. It can also prompt you to check that you have all your customer details up to date, such as their email addresses and phone numbers, to make sure that continuous marketing campaigns don’t miss the mark.

Reverse ETL is just one way you can use integrated data to update your CRM and increase customer engagement. Find out more here.

Repurchase Rate and Customer Acquisition Cost

Your customer acquisition cost (CAC) is how much you spend on fostering new leads and convincing them to buy from you. CAC can include marketing costs, paying content creators, inventory management costs, logistics, the cost of providing vouchers, and other incentives – depending upon your particular business plan, every cost that goes into assuring sales to new customers is part of your CAC.

Understanding your repurchase rate can help you manage and even lower your CAC. If you build lasting relationships with loyal customers, those customers need very little prompting to come back and buy from you. Instead of needing a long-term, highly targeted and funnel-type marketing campaign, a simple follow-up email could be the key to getting customers like this to come back and buy again. You don’t have to sell yourself as a company every time. Customers who come back and buy with very little prompting help pay for your CAC and reduce the overall cost of your marketing strategy. This is also a great indicator of overall customer satisfaction.

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Increase Repurchase Rate with Integrate.io

Improving your repurchase rate is so much simpler when you have access to all your business data. Which products are most popular? What are people talking about on social media? Which Facebook Ads got the most clicks this week? Which email marketing campaigns were most effective? Investing in a data integration platform like Integrate.io can bring all this data into a single destination, ready for analysis by your business intelligence (BI) tools so you can glean actionable insights to help boost your repeat sales.

Integrate.io is a new, fast ETL platform with a range of features all designed to help e-commerce retailers extract data from a number of sources, from Shopify to Salesforce and many more, and store it in a single destination. As well as transforming and cleansing data, the super-quick change data capture (CDC) options can provide fully automated updates to keep your consumer data as fresh as possible.

Find out what’s making your existing customers tick, and really hone your loyalty schemes, marketing strategies, and create financial statements and KPI reports that show your business’s growth and dynamic range within your market. Reverse ETL allows you to take data from your data warehouse and plug it into your CRM, keeping your customer details up to date and allowing you to be proactive with communication to nurture your returning customers. For more information about the cloud-based data integration platform with deep e-commerce capability, schedule a demo today.