Repeat Purchase Rate

What is Repeat Purchase Rate?

Repeat Purchase Rate measures the proportion of your customers who have made more than one purchase. It’s a very easy KPI to measure, found by dividing your number of repeat purchasers by your total number of customers in a given period.

The Repeat Purchase Rate is a useful tool in analyzing customer loyalty and retention. It’s an important KPI for your sales and finance teams to monitor.

Why is Repeat Purchase Rate important?

The Repeat Purchase Rate is important for serving as a measure of customer retention, as it indicates the proportion of customers who make more than one purchase from your company.

It’s an especially relevant KPI for those businesses whose model in large part relies upon “regulars” (e.g., e-commerce and restaurants). Repeat Purchase Rate holds little weight for sellers of one-off purchases (e.g., luxury vendors), and retention rate is a better KPI for subscription-based companies such as SaaS firms, whose business model is based on increasing subscriptions while minimizing customer churn.

How to increase your Repeat Purchase Rate

The best way to increase your Repeat Purchase Rate is to make your product and customer service combo appealing enough that customers keep coming back for more. So development of this goal can occur along several fronts: improving your product or service on the back end; better identifying your ICP and market niche; reducing your customer service response time; and, of course, paying attention to customer feedback.

As usual, while benchmarks will vary by industry, a good rule of thumb is to have 20-30 percent of your customers as repeat purchasers. To target your customers more thoroughly, you can analyze their spending habits on the basis of demographics and purchasing time. Keep in mind, however, that repeated customers aren’t everything. If your business is undergoing a period of rapid growth and customer expansion, metrics such as Repeat Purchase Rate are less important.

That said, Repeat Purchase Rate can be closely tied to NPS (Net Promoter Score). After all, it’s likely that your repeat customers would rate your business as an 8 to 10 on a customer satisfaction scale, with these scores indicating that they’d recommend your product or service to others. So doing your best to not only attract but retain repeat customers is probably one of the best decisions your company can make.

Other KPIs similar to Repeat Purchase Rate include:

• Time Between Purchases
• Inventory Turnover
• Net Promoter Score (NPS)