Your repeat customer rate (RCR) is a unique metric that signals brand loyalty and drives sustainable growth. It is measured when a customer returns to complete another transaction.
This guide highlights exactly how to calculate this crucial KPI and what a “good” rate looks like. It also provides actionable pro tips to boost your business.
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What Is Repeat Customer Rate (And Why It Matters)
Repeat Customer Rate (RCR) is a metric that measures the percentage of customers who make more than one purchase over a specific period. You could call it the repeat purchase rate (RPR) or customer retention rate (CRR).
This metric serves as an index of customer loyalty and customer satisfaction. With a high repeat customer rate, customers tend to trust your brand. And this will ensure they return for additional purchases.
Note, however, that a person who purchases two or more times is a repeat customer. In contrast, a paying customer has finalized a purchase. With this distinction, you can definitely calculate RCR.
The Financial Impact of a High Repeat Purchase Rate
Repeat customers are one of your most valuable assets. They create 300% more revenue than first-time customers. Ensuring sustainable growth is the goal of every business owner.
Customer acquisition versus retention costs are something to factor in as well. It will cost you 5 – 25 times less to keep existing customers than to find new ones. It often requires the use of several marketing strategies.
Do you know that, according to a report, a 5% increase in customer retention can boost profits by up to 75%? Thus, even a small rise in retention will yield massive results.
How to Calculate Repeat Customer Rate Accurately
To calculate the repeat customer rate, you need to first know its formula and how it applies.
The Simple Formula for Repeat Purchase Rate (RPR)
It involves a straightforward process to calculate your repeat customer rate. But first, define your period. Based on the business model and purchase frequency, it may be monthly, quarterly, or yearly.
Formula: (Number of Repeat Customers / Total Number of Customers) × 100 = Repeat Customer Rate (%)
Practical example: If you had 230 total customers in a quarter, and 80 of them made a second purchase. Your RCR would be (80 / 230) × 100 = 34.78%.
You can collect customer data and have valuable insights into customer behavior patterns. It is possible with tools that can automate this tracking, like:
A Comparison of RCR Calculation Methods
| Metric Name | Formula | Description |
| Repeat Customer Rate | (Total repeat customers / Total paying customers) x 100 | Percentage of those carrying out multiple purchases over a period. |
| Repeat Purchase Rate (RPR) | (Number of Repeat Customers / Total Number of Customers) x 100 | KPI tracking how many customers return to make a second purchase. |
| RCR (Alternate) | Number of customers who made a second purchase / Total number of customers | Percentage of customers who made a purchase more than once over a period. |
What Is a Good Repeat Customer Rate? (Industry Benchmarks)
With the variety in the industry and products, there’s no “perfect” repeat customer rate. Yet, benchmarks can provide you with useful guidance.
For most e-commerce businesses, a repeat customer rate of 20-40% is quite good. Moreover, the rates above 50% are excellent. A Zendesk report shows that the average RCR for e-commerce is 28.2%, and it continues to rise.
Hence, to drive business growth, you need a balance. While making efforts to keep existing customers, create strategies for new customer acquisition.
Why Repeat Customer Rate Varies by Industry
Product type influences repeat purchase patterns. Consumable products like beauty items or food can encourage repeat purchases. But this is not the case with durable goods like furniture or electronics.
Subscription-based models see more predictable repeat customer rates due to their recurring nature.
10 Pro Tips to Improve Your Customer Retention Rate
The following are tips that have a positive impact on your customer retention rate:
1. Build a Professional Online Store
A trustworthy and fast online store forms the foundation of an exceptional customer experience. No matter how good your product is, you will lose customers if your site has slow loading times or poor navigation.
Building an outstanding website creates confidence and makes every purchase enjoyable. Why not start with beginner-friendly website builders like Hostinger or IONOS? Then, see where you go from there.
To improve the speed and security of your e-commerce store, use the best web hosting options. This way, you can build a powerful site with platforms like WordPress.
2. Provide Exceptional, Personalized Customer Service
Repeat business is often a function of excellent customer service. A HubSpot study found that 93% of customers make repeat purchases with brands offering excellent service.
According to McKinsey reports, personalized interactions with customers matter a lot. The same is true of response time, as it affects customer satisfaction levels. 90% of customers consider “immediate” responses important when asking questions.
3. Enhance the Post-Purchase Experience
Many businesses overlook the period after purchase. It’s an opportunity to build brand trust and encourage further purchases.
Update your customers on when the next shipments are coming in, and keep detailed order tracking. According to a DHL report, 60% of shoppers value end-to-end tracking over delivery speed.
Incentivize customers for their next purchase by offering exclusive discounts. Or you can do this by previewing new products.
4. Implement a Customer Loyalty Program
Use loyalty programs to reward customers through points, exclusive discounts, or free gifts. These would no doubt encourage repeat purchases and increase customer lifetime value.
A study by Invesp reveals that 58% of consumers buy from brands whose loyalty programs they belong to. They do this at least monthly.
You can now create and manage reward systems with platforms like Smile.io or LoyaltyLion. Loyalty points ensure continual purchases by customers.
5. Leverage Email & SMS Marketing
With email marketing, you’re bringing your business to a higher level. Thus, providing a direct channel you own ensures repeat business.
Use triggered emails to keep customers:
- Welcome Series: These emails achieve some of the highest open rates
- Abandoned Cart: Converting about 16% of customers
- Reactivation: Win back past customers who haven’t purchased recently
Consider using tools like Kit (formerly ConvertKit). It can help you automate and personalize messages to your target audience.
6. Use Automation to Offer 24/7 Support
Automate responses to common questions like “Where is my order?” These inquiries account for up to 30% of service requests, consuming valuable resources.
Self-service tools, including FAQ pages, knowledge bases, or chatbots, provide answers all day. A Drift survey found that 64% of customers consider 24/7 service the best chatbot feature.
7. Actively Collect and Showcase Customer Feedback
Gathering customer feedback through surveys, support interactions, and review monitoring helps a lot. It can gauge customer satisfaction levels.
Your relationship gets stronger when you act on or respond to customers’ feedback. It demonstrates you value their opinions. A Harvard Business Review article says 80% of consumers provide business feedback.
Use this information to improve products and services. You’ll then be able to create better experiences that will naturally lead to repeat business.
8. Build Trust with Social Proof
Showcase genuine customer experiences to build confidence and drive conversions. Social proof will no doubt influence purchasing decisions.
Let everyone be able to see customer reviews and testimonials throughout your site. According to Oberlo, product pages with reviews convert 3.5 times more than those without.
Encourage user-generated content like photos for the sake of authenticity and community. Customer engagement with your brand will be beyond transactions.
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9. Upsell and Cross-sell to Increase Customer Lifetime Value (CLV)
Strategic upselling and cross-selling techniques increase average order value. At the same time, it will enhance customer satisfaction through relevant recommendations.
Upselling encourages customers to purchase premium versions when considering a product. Cross-selling recommends other items or accessories that complement a product.
10. Minimize Cart Abandonment
Your checkout process should be simple, with minimal steps. Complex checkouts often make customers run away before completing their purchase.
Since unexpected costs often result in abandonment, offer incentives like free shipping. And retargeting ads can remind customers about abandoned items. But put in place “burn pixels” so your purchasers don’t see irrelevant ads.
Key Metrics to Track Alongside RCR for a Full Picture
You’ll gain more comprehensive business insights by tracking RPR alongside other metrics. These other metrics include the following:
- Customer Lifetime Value (CLV): Total revenue expected from each customer throughout the relationship
- Customer Acquisition Cost (CAC): Total cost you spend to convert potential customers
- Average Order Value (AOV): Average spending of customers per transaction
- Purchase Frequency: How often customers buy within specific timeframes
- Churn Rate: Percentage of customers who stop purchasing over time
These metrics work together to reveal how many customers return. It also reveals their spending patterns and business health.
Conclusion
Adopting a repeat customer rate in your business is a cost-effective approach to sustainability. Calculating this metric will help you deliver exceptional experiences.
You can install targeted retention strategies. Additionally, you’ll build a loyal customer base and stable revenue growth.
Next Steps: What Now?
You no longer need to sit back; rather, you need to take the next step forward:
- RPR helps you measure the difference between repeat customers and paying customers.
- Use the formula (Number of Repeat Customers / Total Number of Customers) × 100.
- Balance customer retention with new customer acquisition.
- Because RPR varies with different industries, compare your rate to similar businesses.
- Create a positive impact on your customer rate with the highlighted above.
- Track RPR alongside other metrics like CLV, CAC, AOV, purchase frequency, and churn rate.
Further Reading & Useful Resources
Below are a few guides that are worth checking out:
- Thank You Messages: Learn to draft thank-you messages for customer purchases.
- What is E-commerce? Get to know all you can about the booming business industry.
- How to Create a Website: Check out our step-by-step guide for beginners and small businesses.
- E-commerce Retention: Learn effective retention strategies for e-commerce businesses.
- Lifecycle Marketing: An ultimate guide to lifecycle marketing.
