Data Analytics

DTC Metrics Series: Repurchase Rate

What is Customer Repurchase Rate?

Customer repurchase rate tells you how many of your customers are making subsequent purchases after their first time shopping with your ecommerce store. This metric shows you which of your customers originally made a purchase in each month and how many of those customers made another purchase and when. This provides the clearest view of your customer base and how often you can expect them to make repeat purchases.

Peel provides you a look at your percentage of customers, per cohort, who have converted into repeat customers by making subsequent purchases. This is represented on a monthly basis, grouping customers into cohorts based on the first month they made a purchase.

Repurchase rate is a cumulative metric, so the percentage only increases showing you the increase month over month. As time goes on the repurchase rate of the later months (the right-most columns) should either increase or plateau as customers from each cohort have had more time to make new purchases since their first purchase.

Repurchase Rate DTC Metrics

In the example below, 1.87% of your new customers from the May 2020 cohort came back and made another purchase within the first month. You can toggle to see what the repurchase rate is for 3+, 4+, 5+ repurchases.

You’re doing something to entice 148 people from the May 2020 cohort to come back and purchase again in the month of May. A month later in June, 3,054 people came back since their original purchase and made another purchase, which is a 38.64% repurchase rate.

This kind of data can inform a wealth of useful actions on your part. If you ran specific marketing campaigns like customer loyalty rewards or free shipping during that time, you can have an indication of what boosted the number of customers from certain cohorts and repeat or even improve upon those actions. Sometimes, it may even be a good idea to dig into the sales data even further for these repurchase cohorts and see who’s ordering what. If you notice that your customers are coming back for repeat orders, meaning the same items again, you can lean your marketing strategy into that and engage them with marketing materials featuring those products at the right frequency. Ultimately, this should improve your customer lifetime value (CLV) and boost overall growth for your business.

Are you Sending Follow Up Marketing Messages to Encourage a Repurchase?

Does your product lend itself to multiple purchases during a specific time window?

These are questions you should be asking yourself to improve your repurchase rate and customer retention. Customer acquisition cost (CAC) can cost 5x more than retaining your existing customers. Making adjustments to improve repurchase rate will have benefits for your customer retention rate as the two are generally correlated. Learn more about the difference between the two in our repurchase vs retention rate guide.

A couple common ways to achieve this are follow-up SMS campaigns and email campaigns. Using your repurchase cohort data to find the right period of time to engage your customers is key. This gives you the opportunity to make a timely push to get them to make their next purchase or reorder based on their last purchase.

If you create experiments and test the following month to try and improve these numbers, you can gauge how those experiments fared. As you can see in the example, your June 2020 cohort has a 41.67% repurchase rate by the 2nd month, which is higher than your May 2020 cohort. Why might that be? Did you try something different in your marketing or sales? The answers to these questions can help you make both long-term and short-term adjustments to your strategy to boost your repeat purchase rate.

Learn more about Repurchase Rate by watching the quick video below!