Your Repeat Customer Rate Is the Holy Grail of KPIs
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Sep 1, 2021
For every game, business, or sport, there’s a critical key performance indicator (KPI) that stands above the rest. How many Super Bowls has a football team won? How many Grand Slams has a tennis player won? How often do an airline’s planes arrive on time? It’s undeniable that there are certain metrics that most accurately gauge a given level of success.
Measuring success isn’t always so cut-and-dry, though. For instance, how would you rate how successful your favorite online store is? Is success based on the products? The chatbot feature? The prices?
For ecommerce brands, the creme de la creme metric is the repeat customer rate. While many KPIs can showcase a variety of insights into your business, repeat customer rate showcases your overall customer experience health in the most concise way. If your RCR is primo, odds are good that your store is scaling big.
KPIs Every Ecommerce Brand should Know
If we wanna get technical about this, the base definition of Key Performance Indicators (KPI) is a measurable value that can provide insight into business objectives. 🤓
KPIs highlight areas within the customer journey that drive toward (or away) from short- or long-term goals. For example, a common KPI measured by many merchants is conversion rate, or how many site visitors actually make a purchase. By keeping an eye on conversion rate, sellers can understand what seasons, changes, or strategies boost or bust conversions.
Tactics like offering free shipping could drive a spike in purchases. On the other hand, you may see a decline in conversion rates if product details are insufficient. The point is, tweaks made to the customer journey can improve or impair your conversion rate, and watching KPIs helps pinpoint the causes of those hills and dips.
While KPIs are crucial to business strategy, understanding them is even more important. Everyone likes poring over a stack of data, but simply looking at numbers isn’t enough to make the most of KPIs. Digging into this data can lead to increased performance across the entire organization.
Using every bit of data you can muster is especially crucial for the ecommerce market and standing out from competition. Think about the physical shelf your products would be on in brick-and-mortar stores. If you sell coffee, for instance, there would probably be around a dozen competitors sharing that shelf space.
Now think about the digital shelf: If you type “coffee” into Amazon, there are more than 2,000 results. And if you’re a brand in that race, you better hope you show up near the top of those results. The digital shelf has far more competition, and winning on the digital shelf takes more insight into your performance and consumer behavior than it does in retail stores.
Looking at the entire customer journey can make winning on the digital shelf easier:
- Measuring SEO rank can showcase your share of the market on Google and increase your discoverability.
- KPIs that demonstrate increased or decreased consideration to purchase your products could be bounce rates from product pages or number of pages per session the customer views.
- Conversion rate isn’t the only KPI for the conversion part of the customer journey — return on ad spend (ROAS) and customer acquisition cost (CAC) showcase your efficiency at converting customers.
- Retention KPIs, such as our gold standard repeat customer rate, showcase your customer loyalty.
For even more ideas about metrics to measure, check out this bad boy.
Why Repeat Customer Rate Matters Most
At the beginning of 2021, Route surveyed merchants about which KPIs were most valuable in their own strategies. The results were a landslide in favor of repeat customer rate.
Repeat customer rate represents the number of repeat customers, or customers who’ve purchased two or more times, divided by your total customer count. If your rate is low, that’s a sign that most of your customers are new customers who’ve made one purchase and, for some reason, haven’t returned.
This metric is also able to measure third, fourt, or fifth repeat purchases over time, serving as a snapshot into customer sentiment. The more people come back, the happier they are with your product and shopping experience.
RCR is related to another popular metric, average customer lifetime value (LTV or CLTV), but there are a few key differences between these KPIs. RCR tracks the number of times a customer returns and purchases. LTV measures the amount customers spend with you minus the costs associated with acquiring (and keeping) that customer. Unlike average order value, LTV helps sellers understand the overall amount customers are spending over the entire span of their engagement with a store.
If a store’s RCR is increasing, odds are good that the overall customer LTV is also increasing as customers are returning and spending more than it cost to acquire them.
Measuring return customer rate is a stronger measure of a store’s customer experience than LTV, which is a bit more complex. LTV signals marketing efficiency, product experiences, and customer experiences. Both KPIs are important, but when it comes to ecommerce, customer experience is a huge differentiator and the cost of customer acquisition can be incredibly high. Ensuring that you keep your customers through more than one purchase is crucial to long-term success.
RCR can highlight a lot of good and bad in an organization. Striving to up the RCR is useful because it will save companies money in the long run, as repeat customers are cheaper than new ones. It also means that customers are enjoying your products, your shopping experiences online, and your customer service (when the need arises). It’s also a good sign of things to come since loyal customers can sustain your store and even help you plan for the future.
“It’s cheaper to get past customers to purchase again than it is to find new customers.”
—Richard Lazazzera, Founder of A Better Lemonade Stand
As many good things as this metric points to, though, there are some negatives that RCR can highlight as well. If you are consistently getting a 100% RCR, that means you’re not gaining any new customers. However, a low RCR can also signify that you aren’t retaining any of your current customers — meaning that there’s a problem in the customer journey that keeps them from buying again. There may be glitches on your site, product defects, poor customer service, or not enough motivation to bring them back when they have a sea of other options.
The Relationship Between Customer Experience and Repeat Customer Rate
When it comes to the hotly competitive ecommerce world, customer experience is the name of the game. Modern consumers are no longer just making transactions—they’re seeking supportive, feel-good, memorable experiences. And when a shopper’s experiential expectations are blown outta the water, you can bet they’ll be back to shop again.
An annoying customer experience — such as too many clicks to purchase, insufficient product information or content, little transparency on shipping or pricing, or glitches on the website (to name a few) will result in many shoppers choosing a competitor.
However, a positive customer experience with engaging product experiences, detailed information and content, an easy purchasing process, and a strong post-purchase experience will keep your customers returning far into the future.
A good customer experience directly impacts repeat purchases and coveted long-term loyalty. While experience may not be the only factor driving customers back to the checkout, it is a huge part of the equation.
Plus, “experience” is a pretty loaded word that reaches into every part of the customer journey. So, even if a rough experience is leading to a not-so-great RCR, it could still be hard to nail down what part of the experience is the kink in the hose.
Consider these seven facets that impact the ecommerce customer experience:
To keep top of mind, branding must catch a shopper’s eye. Your logo, brand voice, products, product names, colors, and more must be easily identifiable and memorable. On top of memorable assets, frequently showing up on channels that your target audience is using will solidify a place in their mind. With blah branding or infrequency, even new customers may forget about you when it comes time to purchase.
Use categories, keywords, and identifiable tags in your product detail pages that make it easy to find your brand and products. Some quick adjustments that have big impact would be to create more detailed product descriptions or titles on the product pages so that search engines know precisely what you’re selling. Also, it doesn’t hurt to snoop on a few top competitors. If your competitor is showing up on Page 1 of Google search results, you want to make sure to use the keywords and show up right there next to them.
Ease of Purchase
How many clicks does it take to go from perusal to purchase? Don’t make your customers jump through hoops to buy a product. Minimal clicks and easy shipping make it more likely that customers will keep coming back to you. When your budget allows, add on breezy benefits like autofill checkout pages or customer account setup for truly one-click shopping.
Keep track of your inventory — customers won’t always come back if you’re constantly out of stock of the products they want. Understanding your production logistics and keeping an eye on global factors that could impact them is important for your inventory stockpile. However, also make sure not to sink too much cash into heaps of inventory that could sit around too long.
Your product info has to be completely accurate and easily understandable. If the customer receives something that they weren’t expecting, trust will be lost and they won’t come back. Make sure to include product dimensions, weight, uses and even a few images of the product in use. Total optimization is key here. And when in doubt, ask a friend to read it and see if they have any lingering questions they’d have if they were shopping. A fresh set of eyes never hurts!
Post-purchase Experience (PPX)
One of the most overlooked parts of the customer journey is the post-purchase experience. The PPX is essentially everything that happens once a shopper hits “Buy.” While often an afterthought, it is the most important and valued part of the experience for customers, especially since it’s the last brand touch point between buying and delivery. Shipping, tracking, and the unboxing experience have to be transparent and enjoyable, and issues need to be easy to resolve if something, err, unplanned should happen. Creating an extraordinary and memorable PPX is a huge opportunity for ecommerce merchants to differentiate and boost their RCR.
Loyalty programs and memberships
Keep your customers coming back by offering them incentives to keep shopping with you. Store memberships, subscription services, and loyalty programs that offer free discounts, exclusive products, or early access will keep your customers happy and returning.
Strategies to Improve Your Repeat Customer Rate
If you find that your metrics aren’t where you want them to be, or you’re looking to keep optimizing, there are a multitude of strategies you can use to reach your business goals.
Customer engagement is the main theme for raising RCR. To increase the number of customers that come back to purchase again, you need to engage with them and nurture them better than competitors in your space.
It’s simple: If you forget about shoppers, shoppers forget about you.
To keep the experience engaging, some tactical steps you can take could look like:
Email Nurturing: Email campaigns are a great way to engage with your customers at any point along their journey with your brand. However, customers don’t want to be overwhelmed with generic marketing emails that simply don’t resonate.
Personalize your emails to your unique customers based on what products would be of interest to them. Improve your email efficiency and performance while creating a great experience for the customer by only providing the most relevant emails, tracking updates, product recommendations, and more.
Targeted Ads: Similar to best practices for email nurturing, don’t blast ads across the internet blindly. Your ad performance (and budget) will suffer if you don’t target the right audience at the right time. For the customer, seeing only relevant ads will improve their experience, too. An ad that has nothing to do with them won’t be worth the money you spent on it.
Personalized Recommendations: You can provide these through a few channels, whether it’s ads, emails, SMS, or your website. Track shopper behavior, such as purchases and viewed items, and demographics to get a sense for what other products they may enjoy. When done well, this will increase your conversion rate and your RCR.
Loyalty Programs: Reward your customers for shopping with you! Offer past customers exclusive coupons and discounts to show active support and appreciation. Additionally, build a loyalty program that rewards customers the more they shop with your store.
Continuous Engagement: It’s important not to forget about your customers at any point along the funnel. Don’t just engage with them when you want them to discover you or when you want them to purchase. Be sure to engage along the entire customer journey with personalized touches that delight them. This way, your brand will stay top of mind and when you do slip into their inbox with an offer, it won’t feel spammy or intrusive.
Improved Post-Purchase Experience (PPX): Improve your PPX — the part of the customer experience that happens after they’ve hit the buy button. This includes shipping, tracking, unboxing, and, of course, coming back to buy again!
While ecommerce has evolved dramatically the past few decades, the PPX has remained relatively untouched. Shoppers have resigned themselves to scouring inboxes for tracking numbers, searching for up-to-the-minute shipping details, and sitting in chatbot purgatory when they have questions or something goes wrong.
Modern shoppers want a better PPX, and your store will stand out, provide a better experience, and drive repeat customership if it gives the shoppers what they want. This can be done through transparent shipping, easy tracking, and an enjoyable unboxing experience (plus help from a post-purchase platform like Route 😎).
Happy Customers Are Repeat Customers
Repeat customer rate is a metric that leads to long-term success and scalability. You can’t grow sustainably without hanging onto the customers you’ve worked hard to acquire. By focusing on achieving or sustaining a healthy RCR, brands can reach new heights and achieve greater goals.
With Route, ecommerce brands can improve the customer experience throughout the most critical part of the customer journey. Offer real-time visual package tracking, engage with your customers in a part of the funnel that is typically handed off to a shipment provider, and improve trust in your brand for the long haul.
This will leave your customers happy in the final, crucial moments they have with your brand for this purchase experience. Make it a good one so that they’ll want to come back time and time again.