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The Compounding Advantage Of Repeat Purchase Rate

the-compounding-advantage-of-repeat-purchase-rate

Optimizing your customer analytics for repeat customers can have some surprising results.

When you're acquiring new customers, a 10% boost in traffic should add around 10% to your revenue. It's linear.

Improve your repeat customer metrics like the Repeat Purchase Rate by 10% and you'll often see much more than a 10% boost to your bottom-line. It'll compound, all because each customer who buys again is likely to buy again and again and again…

  • 10% more orders on the 1st -> 2nd orders
  • 10% more orders on the 2nd -> 3rd orders (including the additional orders from the 1st -> 2nd)
  • 10% more orders on the 3rd -> 4th orders (including the additional orders from the 1st -> 2nd and the 2nd -> 3rd)
  • and so on.

A 10% overall improvement in your Repeat Purchase Rate can add 20% or 50% or even doubling your revenue. It all depends on how well you're performing now.

If your Repeat Purchase Rate is low, under 25%, then you're not getting this compounding benefit. I'd recommend you read my advice on the topic and use Repeat Customer Insights to measure your performance.

Eric Davis

This originally appeared on the LittleStream Software Blog and is made available here to cast a wider net of discovery.
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