Repeat Customer: Definition, Rates & Profitability

As an eCommerce business, you’re constantly putting in efforts to acquire new customers. You fine-tune your marketing strategies, optimize your acquisition budget, and spend your time finding better ways to attract new customers to your eCommerce store.

But even though most businesses focus all their attention on acquiring new customers, there’s a highly overlooked element of customer acquisition that has a lot more value than attracting new clients: customer retention. Or, in other words, repeat customers who repeatedly come back to buy from you.

As a result, gearing your marketing strategies towards creating repeat customers who continue doing business with you is one of the best ways to increase your revenue.

In this article, we’ll go over why repeat customers are essential for your business and the strategies you can implement to create more of them.

What Is a Repeat Customer?

The repeat customer definition is a very simple one. A repeat customer is someone who has purchased from you before and keeps coming back to your store to buy from you again and again.

Repeat customers are the bread and butter of any eCommerce business. They’re essential to any business because they’re more likely than first-time customers to make repeat purchases and spend more money with you.

They’re also your most loyal customers and brand advocates who recommend your products or services to their friends and relatives or share their positive reviews of your brand on social media.

6 Reasons Why Repeat Customers Are Better Than New Customers

Achieving a high retention rate is the holy grail of eCommerce, and the importance of repeat customers to your eCommerce business can’t be overstated!

That’s because repeat customers generate recurring revenue, and recurring revenue is important to your bottom line.

In fact, 48% of an eCommerce store’s revenue comes from repeat buyers — and for many good reasons! Here are 6 of them.

Repeat Customers Spend More

Repeat customers spend more money at your store. Statistics say that the average repeat customer spends 33% more per order than a new customer on their first visit to your site.

That means the longer someone shops with you, the more likely they are to spend more money on every purchase over time. This is because each purchase builds trust and familiarity with your brand, which leads to more purchases later on down the line.

💡 It’s a no-brainer — if you’re smart about your marketing, you’ll focus on making sure people come back again and again.

Repeat Customers Are Loyal

Did you know that 81% of customers make buying decisions based on how much they trust a brand?

And your repeat customers are already loyal to you, which means they’re easier to sell to. You don’t have to convince them! They already know they can trust you and count on you to deliver what they want.

So, they come back because they feel confident buying from you and want more of what you have to offer. They may be repeat buyers, but they don’t necessarily buy the same thing over and over again — they are always looking for new items from your store or website.

Repeat Customers Have a Higher Lifetime Value

A new customer who’s just trying out your store or website may not be sure about making future purchases there.

This means they may not stick around as long as someone who’s already had a positive experience buying something from you in the past.

Repeat customers are more likely to stay longer with your brand, which increases their lifetime value.

💡 A new customer may only purchase from you once, but a repeat customer will make multiple purchases over time.

Repeat Customers Cost You Less

One of the biggest challenges of any eCommerce business is optimizing its customer acquisition cost (CAC) – and repeat customers will cost you less in terms of customer acquisition cost than new customers.

In fact, acquiring a new customer can cost up to five times more than retaining an existing customer. With repeat customers, you’ve already done the hard work of getting them to know about your product or service and getting them to buy from you once.

💡 Repeat purchases require less time and money spent on promotion and advertising, which means more profits for your business over time.

Repeat Customers Promote Your Brand

Repeat customers will tell others about your business because they want them to get the same great experience they did when they bought from you.

This gives you free advertising and word-of-mouth marketing at its best!

This is especially true if you have an active social media presence. Social media has the ability to reach thousands of people at once, making it ideal for spreading word-of-mouth recommendations.

💡 And good reviews have the power to influence people’s buying decisions positively. In fact, 93% of consumers are more likely to buy if the brand has positive online reviews.

Repeat Customers Bring Recurring Revenue

Repeat customers bring constant and recurring revenue to your eCommerce business. If you have products or services that sell well, you can count on a steady stream of income every month or year because you know that your loyal customers will keep coming back for more of your products or services.

This means that no matter how bad things get in terms of economic downturns or other external factors affecting the business climate, these loyal customers are likely to keep coming back.

How to Get Repeat Customers

By now, you know why repeat customers are the definite winner of the repeat customers vs. new customers battle.

However, this doesn’t mean that getting repeat customers doesn’t require some marketing efforts from your side. On the contrary!

If someone buys from you once or even twice, they may not come back again if they don’t feel like they got value for their money or if they had a bad experience with your product or service.

So, how do you convert new customers into repeat customers and make sure they stay loyal to your brand? Let’s go over a few strategies you can implement to get more repeat customers.

Create a Loyalty Program

Customers love loyalty programs! 68% of consumers value shopping with a brand more when they can participate in a loyalty program and get personalized discounts.

A loyalty program can be something as simple as having a rewards card. This is a great way to incentivize repeat purchases and encourage customer loyalty.

If your business sells a variety of products, it’s easy to set up a rewards program that will appeal to everyone who shops at your store.

For example, if you own a pet store, you could offer points toward free products for every dollar spent on food or toys. You could also give away free gifts for customers who reach certain point levels.

Offer Incentives for Regular Customers

Customers who come back to shop with you over and over again are usually the most loyal ones. Giving away discounts, free gifts, or free shipping can be an excellent incentive for them to keep coming back and a token of appreciation for their loyalty.

For example, you can offer them a discount whenever they enter the store or shop online.

You can also give them additional discounts on their birthdays or anniversaries, or send them a discount coupon for future use after they make an order above a certain amount.

Offering such incentives will make your customers feel very special and encourage them to keep coming back.

Improve Your Customer Service

Did you know that 66% of consumers in the US cite good customer service as one of the main reasons they stay loyal to a brand?

No matter what type of business you’re running, one thing is for sure: your customers will always appreciate a good customer service experience. And if they don’t have one, they won’t be happy with your business and probably won’t come back for more.

Good customer service isn’t just a matter of having someone who can answer questions about your products.

It’s also about making sure that you’re doing everything you can to meet and exceed your customers’ expectations.

That means responding quickly when they call or email, offering solutions to any problems, and following up after purchases are made to ensure everything went smoothly.

Encourage Customers to Leave Feedback

If you want people to come back for more, you need to know what they’re thinking. Feedback is a great way to get insight into what your customers want and need from you.

You can even do this by emailing them with a short survey or asking them questions via social media or on your website.

Give your customers the opportunity to share their feedback and act on it to improve your service.

You don’t have to agree with every complaint, but it’s important that your response acknowledges the customer’s concerns.

💡 If customers feel like they’re being heard and respected — even if they don’t always get what they want — they’re more likely to come back for more.

Show Your Brand Personality

Brand personality is the most important part of your brand, and it can help you get repeat customers.

How? By showing your brand’s personality to customers, they will feel like they know you and understand the why behind your business.

When you show your brand’s personality, it makes you more relatable to customers, which in turn makes them want to come back again.

💡 A great way to show your brand personality is through social media. You can share fun behind-the-scenes photos and videos on Instagram, Facebook, or TikTok. This will help build trust with your clients because they’ll be able to peek behind the scenes and get closer to your brand.

How to Measure Repeat Customers

Measuring repeat customers is important for any business. It shows how well your company is engaging with customers, and it can help determine how successful your marketing strategies are.

There are several ways to measure repeat customers, including:

• Customer Retention Rate (CRR): This metric measures the percentage of customers who come back after their first purchase. A high customer retention rate means the company has done a good job of satisfying its customers.
• Customer Lifetime Value (CLV): This is the average amount of money each customer spends over their lifetime with the company. The CLV gives insight into how much profit you can expect from each customer over time.
• Repeat Customer Rate: This is the percentage of people who purchase from you more than once. It helps measure how well you build customer loyalty and retain customers over time.

How to Calculate Repeat Customer Rate

When calculating your repeat customer rate, it’s important to remember that not all customers will buy from you again within a short period of time — some may buy months or even years later.

You should look at a longer period of time when calculating your repeat customer rate to get an accurate picture of how loyal your customers are over time.

That said, here’s a simple formula to calculate your repeat customer rate:

In other words, to calculate your repeat customer rate, you have to divide the number of returning customers (those who have purchased something from you more than once) by the number of total customers, and then multiply it by 100 to get a percentage.

For example, suppose you had 1,000 visits to your online store last week. Of those 1,000, 50 were customers who’ve already purchased something from you in the past. In this case, your calculation will look like this:

Repeat Customer Rate = 501000*100% = 5%

So, in this case, your repeat customer rate would be 5%.

What’s a Good Repeat Customer Rate?

So, this surely makes you wonder what’s a good repeat customer rate that you should aim for with your eCommerce business. The truth is, there’s no one-size-fits-all answer to this question.

That’s because the average percentage of repeat customers you should aim for depends on your business and your industry.

However, for more eCommerce businesses across various sectors, the average repeat customer rate is between 20% to 40%.

If you have more than 40% returning customers, you might want to focus your marketing efforts more on acquisition than retention.

And if your repeat customer rate is below 20%, it can be an indicator that something isn’t right and customers aren’t especially happy with their experience.

In that case, you should focus on defining what’s not working and how to increase your percentage of returning customers.

Average Repeat Customer Rate for eCommerce

So, what’s the average repeat customer rate for eCommerce by industry? Here are some repeat customer rate benchmarks by industry, according to a study:

By taking a look at this list, we can draw a few conclusions:

• eCommerce shops that sell seasonal products (like tea) have the lowest repeat customer rate.
• Stores selling products that we tend to buy on a regular basis, such as supplements and coffee, have a higher than average repeat customer rate
• Stores that sell products that are less accessible or harder to find (like CBD products) have the highest repeat customer rate.

Relevant Repeat Customer Statistics

To cement the idea that repeat customers are crucial for your business success, here are some relevant repeat customer statistics that you should be aware of.

• Attracting a new customer costs 5 times as much as keeping an existing one.
• Only 18% of companies focus on retention. 44% of companies focus mainly on acquisition.
• 89% of companies think that customer service is the main driving force behind customer loyalty.
• 76% of companies care about customer lifetime value (CLV).
• Only 42% of companies can calculate CLV accurately.
• The probability of selling to a new customer is between 5 to 20%.
• The probability of selling to an existing customer is between 60 to 70%.
• Existing customers spend 31% more money at your store than new customers.
• Repeat customers are 50% more likely to buy a new product from you than new customers.
• Email marketing is the most effective retention channel.
• Increasing customer retention rate by only 5% increases your revenue by 25% to 95%.
• 70% of companies agree it’s cheaper to retain a customer than to acquire a new one.

How to Thank Repeat Customers

When you have repeat customers, it’s important to show appreciation, and thank them for their business.

💡 Repeat customers are an excellent indicator of the quality of your business and products, as well as your customer service. If a customer returns to purchase again from your business, it shows they were happy with their previous experience.

It’s important to thank repeat customers for their loyalty. Here are some tips on how to do this effectively:

Send Them a Thank-You Email

There are many ways to show appreciation for your repeat customers. The simplest and most common way is to send them a thank-you email.

It doesn’t have to be a fancy email campaign. A simple email with a thank you message and a token of appreciation, such as a discount code or a gift, will be enough to make your customer feel appreciated.

Send Them a Thank-You Note

As an eCommerce business, you can get really creative with your thank-you notes! One way is to slip them in the packages so that when your client receives their order, they’re greeted by a personalized, and ideally handwritten, thank-you note.

There’s just something about snail mail that makes it so much more personal than email or text messages.

So, when your repeat customers purchase from you, send them a note thanking them for their business. That extra effort from your side will make them feel incredibly special, which will likely lead them back into your shop again and again.

FAQs

Written by

Andriy Boychuk