In recent times, Shark Tank India has garnered significant traction, showcasing numerous episodes that spotlight emerging Indian startups seeking financial backing and guidance. Throughout the program, the investors expressed a keen interest in the “return rate” presented by each enterprise, ascertaining the frequency of repeat or loyal customers the brand has amassed over its operational history.
So, what does ‘repeat purchase rate’ mean?
Repeat purchase rate, also known as repeat customer rate or simply ‘RPR’ is a customer retention indicator that calculates the ratio of returning customers to total consumers. It calculates what percentage of your total clients return to buy from your brand more than once.
As you may think, the greater the value, the better.
A rate of 0% indicates that none of your customers returned to make another transaction, whereas a rating of 100% shows that every single consumer has made multiple purchases time and again, returning to your brand when the need arises. Your repeat purchase rate is a crucial indicator for gauging your customer retention efforts and the loyalty of your customers to your brand. The repeat purchase rate determines the effectiveness of your brand in encouraging buyers to return, whether it be for a second, third, or even fourth time.
The higher your repeat buy rate, the more loyal returning customers you will have.
Most successful e-commerce brands have around 25–30% of their customers return — but keep in mind that this rate will vary greatly, depending on your industry, primarily because some product types have naturally lower reorder rates, such as durable, long-term items like electricals that are purchased once every few years.
E-commerce companies selling high-end furniture or home appliances, for example, will inevitably have a lower repeat purchase rate than a bookshop that can retarget customers with new releases every month.
Measuring your repeat purchase rate is a long-term performance indicator, so why is knowing client retention success so important for propelling your company forward to greater heights? Here’s why!
Customers who return spend more
According to research, only 8% of a company’s most loyal returning customers account for half of its income. This is because loyal repeat customers usually spend more money with businesses they know and trust, often up to 33% more.
Returning customers rave about your company
Word of mouth is an effective type of advertisement. 90% of people are more likely to trust a brand recommended by a friend or family member instead of one they found. The more frequently your consumers return to make more purchases, the more likely they are to recommend your products and services to friends and family.
Second sales are valuable
A consumer who has only made one purchase has a 27% likelihood of returning, whereas second-time customers have a 45% chance of returning for a third time. The longer your customer’s lifetime span, the easier it is to sell because new consumers are more difficult to persuade than returning customers who are already delighted with their purchase and thus more inclined to spend money with a brand they have tried.
How does Shark Tank India (Season 2) show us the importance of repeat rates?
If you watched Shark Tank India Season 2, you might have noticed some intriguing talks that give us great directional learnings. Most of the Sharks’ often asked questions around net profit, with the logical follow-up: “What is your repeat purchase rate?” According to the show, the majority of business owners reported a repeat purchase rate ranging from 20% to 30%.
If you were like us, you noticed that the one answer that troubled most of the Sharks was monthly burn. A large chunk of this burn rate was due to significant acquisition spending to keep up with expansion plans. While we have nothing against rapid growth, if we were a Shark and 70–80% of a business’s growth came from a new buyer, we would think twice for one simple reason: Most investors don’t want to invest 100% of their funds in helping brands cover their customer acquisition costs.
One of the most important lessons from Shark Tank India Season 2 was to prioritize Repeat Purchase Rate since it directly connects to the business’s profitability and increased customer lifetime value. Making repeat purchases a part of your regular tracking and constantly striving to improve is the best way to establish a profitable business. That is why we at NUPI Pay are sharing some ways for you to boost your repeat rate via our loyalty program.
Let us understand how the NUPI Pay loyalty program can help businesses increase their repeat rate.
The first step to increasing the repeat rate is customer retention, and that’s when NUPI Pay comes into the picture. If you’re wondering why customer retention is vital, here’s why:
- Customers that remain loyal to your brand will improve your revenues.
- They will also recommend and give favorable feedback about your brand to their family and friends.
- Returning customers are likely to spend more money on your brand over time.
- Repeat consumers provide a higher return on investment (ROI) than attempts to recruit a first-time customer.
So, here are some tips to increase your customer retention, which will eventually increase your repeat rate as well:
- Establish a good relationship with your customers
- Make sure you gain not just their business but also their trust
- Ensure to have the customer data work for you
- Build customer expectations, and aim to over-deliver each time
- Know that you’re not perfect, and strive to improve each day
- Keep your customers updated. If they feel a connection, they’ll stay put
- Ensure you have a kick-ass loyalty program so your customers keep coming back for more!
And now, the most important bit: what helps a business increase its repeat rate through a loyalty program?
Keep them incentivized:
Offer incentives (discounts, freebies) to your customers if they promote your brand by sharing it on their social media, for example.
Keep them engaged:
Send them frequent notifications about your latest offers, their empty or incomplete carts, or your best sellers. The more they know about your brand, the more they will engage.
Don’t shy away from offering rewards:
Ask your customers to give reviews and feedback, and give them a discount code in return. Ask them to order again and send them a freebie with their order. Have a loyalty program so tempting (like the one we build for you) that they would want to return to your store — not just for the perks but because they believe in your brand!
And once you’ve done this and have a loyalty program that works for you, your repeat purchase rates are set to soar. So, what are you waiting for?
