Repeat Purchase Rate (RPR) quantifies how often customers return to make additional purchases, serving as a crucial indicator of customer loyalty and business health.
What is Repeat Purchase Rate?
Repeat Purchase Rate (RPR) measures the percentage of customers who make a second purchase within a specified time frame after their initial purchase. Itβs an essential metric for understanding customer loyalty and assessing the effectiveness of your retention strategies, especially depending on the type of products you offer.
A good benchmark for Repeat purchase Rate is 15% in 60 days for consumables & 10% in 365 for non-consumables.
How to Calculate Repeat Purchase Rate? Formula Included
To calculate RPR, divide the number of customers who made a second purchase by the total number of customers who made their first purchase within a given period. Hereβs a formula you can use:
Repeat Purchase Rate =Β Number of Repeat Purchase CustomersΒ Γ·Β Total Number of Customers
This SQL query calculates the RPR for customers who made their first purchase in 2023.
Copy CodeSELECT
(COUNT(DISTINCT CASE WHEN purchase_count > 1 THEN customer_id END) / COUNT(DISTINCT customer_id)) * 100 AS repeat_purchase_rate
FROM
orders
Repeat Purchase Rate Calculator
We made a Repeat Purchase Rate free online calculator so you can measure your RPR in a specific period.
The truth is that the best way to calculate this is by having all your orders, and customer data centralized in a way that allows you to breakdown this calculation by month and the frequency you want to evaluate for your product just like the image below.
Repeat Purchase Rate Examples
You can analyze Repeat Purchase Rate by setting up cohort analyses. Letβs consider a business analyzing the Repeat Purchase Rate (RPR) for customers who made their first purchase in March. By focusing on this specific cohort, they track how many of these customers made a second purchase within various time framesβ30, 60, 90, and 365 days.
If 100 customers from this cohort made their first purchase and 5 returned within 30 days, the RPR for that period would be 5%. Over a year, if 15 customers make a repeat purchase, the RPR increases to 15%.
This cohort analysis is valuable because it reveals trends in customer behavior over time, allowing the business to assess retention strategies. Correlating RPR with other metrics like Lifetime Value (LTV) and Average Order Value (AOV) further enhances insights.
A low RPR might signal issues with customer satisfaction, while a higher RPR typically indicates stronger customer loyalty and a greater LTV. By examining RPR in this way, businesses can tailor their marketing efforts to improve retention effectively.
How to Improve Repeat Purchase Rate
Boosting your RPR involves implementing targeted strategies:
- Email and SMS Campaigns: Utilize automated email and SMS sequences to remind customers about products they might want to reorder.
- Personalized Offers: Leverage customer data to craft personalized offers that encourage repeat purchases.
- Cross-Selling and Upselling: Suggest complementary products or premium alternatives to customers who have already made a purchase.
Benchmarks: Whatβs a Good Repeat Purchase Rate in Ecommerce?
A good benchmark for Repeat Purchase Rate varies by product type:
- Consumables: Aim for an RPR of around 15% within 60 days.
- Non-consumables: Target an RPR of approximately 10% within 365 days.
These benchmarks provide a goal to work towards, enhancing your retention strategies accordingly.
Why is Repeat Purchase Rate Important to Marketers?
Repeat Purchase Rate is not just a standalone metric; itβs closely related to other key performance indicators such as Lifetime Value (LTV) and Average Order Value (AOV):
- Lifetime Value (LTV): RPR serves as a strong indicator of LTV. Customers who make repeat purchases contribute significantly to a higher LTV, increasing their overall value over time.
- Average Order Value (AOV): While AOV measures the average amount spent per order, RPR helps you understand how often customers return for additional purchases. Together, these metrics offer a comprehensive view of customer value.
How to use Repeat Purchase Rate for Strategic Decisions
- Cohort Analysis:
- Breaking down RPR by cohorts (e.g., by month) allows you to see how customer behavior changes over time. For instance, you might find that customers acquired in March have a higher RPR than those acquired in July.
- Retention Strategies:
- To improve RPR, focus on retention strategies such as email marketing, SMS campaigns, and personalized offers. For example, setting a goal to increase the 60-day RPR from 20% to 30% can guide your marketing efforts.
- Product Insights:
- Analyzing RPR by product categories can reveal which products are more likely to drive repeat purchases. This can inform inventory decisions and marketing strategies.
Repeat Purchase Rate vs. Customer Retention Rate
While Repeat Purchase Rate focuses on the frequency of repeat purchases, Customer Retention Rate measures the percentage of customers retained over a specific period.
Both metrics are crucial for assessing customer loyalty, but they highlight different aspects of the customer journey.
FAQs
What factors influence Repeat Purchase Rate (RPR)?
Factors include product quality, customer service, marketing strategies, and personalized offers.
Is a higher Repeat Purchase Rate always better?
Generally, yes, but context matters. A high RPR for consumables may indicate customer satisfaction, while a low RPR for non-consumables might be expected due to the nature of the product.
How often should I review my Repeat Purchase Rate?
Regular reviews (monthly or quarterly) can help you identify trends and adjust your marketing strategies effectively.