Tips to Increase Repeat Purchase and Why It's Important to Your Business

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Feb 23, 2022 • 8 min read

Tips to Increase Repeat Purchase (1)

Whether it's a startup or a "giant" company, every industry need a good amount of repeat purchase percentage to sustain their business. Even if acquiring new customers is important, but retaining your existing ones are more profitable.

Especially for brands in FMCG industry, such as household goods, beauty and sanitary products, pet food, dairy foods, baby products and others, which are consumed regularly, it is essential to encourage repeat purchase to boost revenue as well as retain your best customers.

Repeat customers spend more money on your products and require less costly advertising because they already familiar with your products. So it is really important to now how to increase repeat purchase for your business.

Why is it Important to Have Repeat Customers?

A study states that 41% of revenue from e-commerce comes from only 8% of consumers. The 8% figure is the customers who make repeat purchases. In other words, the customers you already have are the ones who are profitable.
Tips to Increase Repeat Purchase (2)
Here are some reasons why repeat purchases are essential for businesses:
  • Repeat purchase shows that your customer retention strategies work!

Repeat purchase rate shows that you have succeeded in creating loyal customers base for your product. Simply put, a customer has a 27% chance of returning to your store after their first purchase.

If they return for a second and third purchase, there is a 54% chance that they will return for a fourth, fifth, and so on. This number shows that repeat purchases are profitable and you should grow your strategies to encourage it.

  • Repeat purchase means better CLV

Customer Lifetime Value (CLV) is important metric for business growth and sustainability Simply put, it is the number of money customers spend on your product over a lifetime.

Now, all consumers have the potential to become repeat customers. They generate greater CLV too because they spend more money on your product.

  • It's easier to get repeat purchase than new purchase

Why? Because customers who are repeat purchaser already know the quality of your products. And base on studies, the average purchase rate of these loyal customers are in the range of 1% and 3%.

In addition, according to the Adobe Digital Index, the probability of an existing customer making a purchase is 9x greater than the  first-time shopper.

How to Calculate Repeat Purchase Rate?

Repeat purchase rate is the percentage of customers who come back to buy another product of yours. 100% means each of your customer comes back again, while 0% shows that no one comes back for your product.

According to the industry figures, the acceptable repeat purchase rate should be around 27% - 32%. Then, how to calculate this repeat purchase rate?

(Number of consumers returning/Total number of consumers) X 100%

Example in case form:

The total number of consumers in a week are 2000 people. 500 of them are returning customers. Then Repeat Purchase Rate is

(500/2000) x 100% = 25%

In this calculation, make sure to include paying consumers - means consumers who have made an active purchase, not those who have just created an account or just stored items in the "wishlist" feature.

Tips to Increase Repeat Purchase for Online Stores

In addition to having products that customers are looking for and easy to find, there are various tips you can do to increase your repeat purchase rate:

  • Create targeted campaigns

General campaigns target customers into several categories and then promote products and services to them. Meanwhile, targeted campaigns observe and study customer search behavior on the internet, then only place advertisements when customers appear to need the product or service.

For example, you do an intense search on Google with the keyword "anti-dandruff shampoo." Next time you open Google, Facebook, or Instagram, what ads appear?

  • Create a pleasant shopping experience

There is a reason why a pleasant shopping experience is associated with a customer's repeat purchase pattern. The straightforward design of the site ensures that consumers can buy only one product directly or add the product to their cart. This convenience also includes hassle-free and secure payment features.

In short, a straightforward site design takes consumers from start to finish in no time and can spend less time navigating and making decisions at every step of the purchase.

Today, many businesses are allocating funds to build digital convenience to address the needs of consumers who are migrating on a large scale.

  • Set up the best CRM

Customer Relationship Management is often limited to consumer interaction only. You can take advantage of the data obtained from this system. By knowing your consumer's profiles in as much detail as possible, you can give them some personalized product suggestions. The essence of a good CRM is to provide convenience to customers even after they have completed the purchase transaction.

For example, you can send birthday greeting cards to customers and give special vouchers from the data obtained. By showing them that you care about them even beyond the purchase, you significantly increase your chances of repeat business.

  • Set communication time

The right timing of communication can increase the chances of generating a sale. The primary purpose of timing these communications is to predict when specific consumers will run out of certain products; then, you can send them reminders about a week in advance. This technique applies to cosmetics, hair and body care products, FMCG, household necessities, and fresh produce.

However, this approach is quite tricky; you have to be careful. Instead of being well received, consumers may feel you send them spam. From a consumer point of view, no more than one email every two weeks is recommended. Also, make sure that every email you send is short and to the point.

  • Create a loyalty program

The idea behind loyalty program is, as the name suggests, to keep customers loyal to you and repurchase your products. So it is the right time to create a fun loyalty program that attract your customers.Tips to Increase Repeat Purchase (3)

How to Create a Loyalty Program that can Increase Repeat Purchases?

Because loyalty program is one of the ways to engage and retain your customers, you have to make sure that your program attract their attention. 

  • Give rewards for specific actions

In addition to purchase points, you can reward customers after performing certain activities or completing specific missions. For example, consumers can get an additional 250 points after uploading proof of purchase on your site within the specified timeframe.

  • Add other values ​​outside the transaction

In addition to the transaction, reward the engagement, too. For example writing reviews, social media mention or tagging, referring friends, or participating in surveys.

  • Offer different programs for different customer segments

In addition, loyalty programs can be tailored to different consumer segments. If historical data shows that some consumers are looking for deals, they may be offered a discount. If other consumers want to be the first to try a new product, they can provide them exclusive early bird access.

Conclusion

It is proven that increasing your business revenue can be started by optimizing your existing customers. The key is to focus on customer retention to maximize earnings from repeat purchases.

As the best loyalty management software featured in G2's Spring 2021 Reports, Tada is here to improve business sustainability by retaining customers using solutions such as loyalty programs and incentives.

Tada also helps businesses move from mere transactions to relationships, from customers to advocates. Tada enables clients to collect, manage, analyze, and leverage customer behavior data from various online and offline channels to maximize customer lifetime value through the right customer retention program. Tada is committed to helping you decide on the right strategies and initiatives to achieve your business goals. Request a demo now!

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Nuraini

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