Written in partnership with Okendo.
Repeat customers are a revenue-boosting engine in the world of ecommerce.
According to data from Gorgias’s merchants, repeat customers generate 300% more revenue than first-time customers. The small act of winning back a customer has a huge impact on your brand.
That’s why it's important for brands to understand repeat customer rate (RCR), or the percentage of customers who shop with your brand beyond a one-time transaction.
In this article, you’ll learn how to track and measure repeat customer rate for your brand, along with tips to boost purchase frequency and improve RCR among your shoppers.
What is repeat customer rate?
Repeat customer rate (RCR) is a key metric used by retailers to measure the percentage of shoppers who make multiple transactions over their customer lifetime.
In ecommerce marketing, you may see this metric go by a few other names, including returning customer rate, customer retention rate, or repeat purchase rate.
Why winning repeat customers is so critical in ecommerce
If you want a major revenue win for your brand, look no further than your own customer base.
The benchmarks for a typical RCR vary by market, but data collected from Gorgias's 12,000+ merchants shows that repeat customers account for only 21% of customers but generate 44% of revenue and 46% of orders.
If that wasn’t compelling enough, retaining an existing customer is five times less expensive for a brand than finding a new customer.
📚 Recommended reading: 25 customer support metrics to measure your team’s impact & how to calculate
What drives repeat customer rate?
To entice customers to come back, brands work to provide incredible experiences throughout a customer’s entire journey.
“My biggest piece of advice is to really understand the customer journey for your business,” says Bri Christiano, Director of Customer Support at Gorgias. “Which touchpoints are going to drive the most revenue?”
For online stores, customer support acts as a vital touchpoint. Build an iron-clad retention strategy, and you’ll see customer satisfaction soar, including boosted conversion rates and repeat business.
How to calculate repeat customer rate
Repeat customer rate is very simple to calculate, but getting started takes a little pre-work.
To calculate RCR, you first need to track the number of repeat customers you have over a specific time period.
Of course, this can be done manually by combing through transactional data, but it would mean days of looking through customer information with a fine-tooth comb. Plus, since customer data is always coming in, you might never see the full picture.
A helpdesk like Gorgias can automatically find repeat customer data for you so you can focus your energy on ways to improve your RCR.
Once you’ve collected your returning customers, divide the number of repeat customers by your total number of customers. Then, multiply that number by 100.
The formula for RCR looks like:
(Total repeat customers / total paying customers) x 100 = RCR
Here’s what calculating RCR looks like using real numbers:
(80 repeat customers / 230 paying customers) x 100 = 34.78%
What is a “good” repeat customer rate in ecommerce?
Like many customer support metrics, there’s no specific benchmark for a “good” repeat customer rate. Ultimately, it all comes down to your brand’s goals, along with factors like industry, audience needs, and the size of your ecommerce business.
The key to returning customer rate is to strike a balance between customer acquisition of new shoppers and re-engaging with existing customers.
Based on Gorgias’s own first-party data with our merchants, we estimate that a 20% increase in customer base can boost your brand’s revenue by 6%.
RCR works well in tandem with a few other metrics to determine the actual value of your marketing efforts:
- Customer Lifetime Value (CLV): How much money a customer will likely spend on your products over a specific timeframe.
- Customer Acquisition Costs (CAC): How much it costs your brand to obtain a new customer versus retaining existing ones.
- Average Order Value (AOV): The amount of money your customers spend per transaction.
- Churn Rate: The percentage of customers your brand loses over time.
6 steps to improve your repeat customer rate
In a recent study, HubSpot found that 93% of customers were more likely to become repeat customers with brands they believe have excellent customer service.
What characterizes excellent customer service? These days, it’s personalization that incentivizes customers to keep coming back.
Let’s look at six tried-and-true steps to create a positive, personalized shopping experience that will encourage your customers to return for more.
1) Build a strong post-sales experience
A customer’s journey doesn’t end when they click checkout.
The post-sales, or post-purchase, experience is a prime moment to keep a customer thinking about your brand or products long-term.
Post-sales can also lead to better brand trust, a critical factor in gaining loyal customers. Bri says, “You're catching that person at a point where they're feeling really energized about the brand.”
The customer service team at TUSHY realized a post-sales strategy was exactly what they needed to close a knowledge gap around their bidets. They found customers who bought a bidet needed help understanding how to install them.
Reps were able to communicate with customers that installing a TUSHY bidet wasn’t a major plumbing project by creating an omnichannel support strategy with email, social media, SMS, live chat, FAQs, and a robust Help Center.
2) Reduce response times
To give your customers a near-instant response, consider these ideas that not only boost customer satisfaction but can reduce the load on your support team.
Automate repetitive questions
According to McKinsey, 71% of shoppers want personalized interactions with support teams, and 76% are frustrated when they don’t receive one.
But a team stuck repeating return policies or tracking down orders doesn’t have much time to personalize a well-thought-out response.
Gorgias Automation Add-On can help deflect up to 60% of your chat ticket volume by automating responses to repetitive questions. It works by sending personalized answers to customers based on their unique Shopify data.
Use a helpdesk to prioritize tickets
You never want to leave a frustrated customer waiting. A helpdesk like Gorgias can automatically assign priority levels to your incoming tickets so agents know exactly which tickets to respond to first.
Quickly resolving a frustrated customer’s problem could be just the thing to turn the negative interaction into a positive one that makes the customer want to come back again.
Drive support traffic to your preferred channels
Customers prefer to have multiple ways to get in touch with your support team. However, some channels have longer response times than others.
📚 Recommended reading: First response time: your guide to understand + lower the metric
3) Collect customer feedback
Customer feedback is your golden ticket to creating great experiences that encourage repeat shopping.
Customers have high expectations for brands these days — and without customer feedback, you’re stuck in the dark about how to meet those expectations.
Here are a few ideas for your team to collect customer feedback and improve your brand experience:
- Monitor customer reviews to find out what actual customers are saying about you. Gorgias customers can manage reviews by integrating with Yotopo, which allows users to track and respond to reviews in a central space. If the feedback you see is positive, that’s a sign your team is in the right direction. If it’s negative, use the feedback to look for areas of improvement.
- Send out surveys to shoppers using a customer marketing platform like Okendo. CSAT helps gather general customer satisfaction. Likewise, you can offer an NPS survey to determine how likely customers would recommend your brand to their friends.
- Build questions into your customer support scripts so agents can talk directly to customers about their experience. Your agents can find out if there are any gaps in the customer journey or reasons why the customer had a negative experience.
- Implement a customer feedback loop to tie your tactics into a cohesive strategy.
4) Create loyalty programs
Customer loyalty programs encourage customers to stay engaged with your brand after their initial purchase — which can dramatically boost your repeat customer rate.
A loyalty program works by rewarding customers for shopping with your brand and incentivizing them to want to come back. It also shows your customers that you value the relationship.
Consider also offering incentive-based referral programs to reward customers for sharing your brand and products with their friends.
Software solutions such as Smile.io and LoyaltyLion make it incredibly easy to build a customer loyalty program from the ground up. Best of all, these options both integrate with Gorgias to pull loyalty customer data into your helpdesk.
5) Offer discounts
So many people hear the word “discount” and get scared for their bottom line. In reality, a sale or deal is just the thing to sweeten the pot and entice a customer to return for more.
That’s because a discount creates the perception of value in the hearts and minds of your customers. Remember how often you offer a deal since many customers will only buy with a discount.
A helpdesk, like Gorgias, can help you automate the process of giving a discount once you pinpoint great moments to offer them to customers.
- Add a discount to your confirmation email to send to customers who recently completed a transaction.
- Leverage SMS messaging to send a small discount to customers who purchased in the last month.
- Use live chat to message a customer who added an item to their carts but moved it to “saved for later” or outright deleted it.
Find out what went wrong, offer a new product recommendation, and a small discount to entice the customer to return to their cart and complete a new transaction.
6) Upsell and cross-sell relevant products
For ecommerce brands, upselling is a tactic to encourage customers to purchase a higher-priced item instead of the one they initially selected.
At its simplest, it’s a way to convince a customer to spend more money on an item.
Cross-selling is a similar sales tactic where you can strategically recommend add-ons related to whatever the customer has put in their cart.
With upselling and cross-selling, the goal is the same: create higher ticket value, encourage greater sales, and improve customer satisfaction.
With Quizzes, brands can ask their shoppers questions to make product recommendations and help customers make fast purchasing decisions.
Invest in a helpdesk to win more repeat customers
You could spend hours scrolling through transaction lines, physically track repeat customers, and manually build marketing campaigns to follow up with customers.
Or, invest in a helpdesk to automate these processes for you. That way, you can focus on building a customer experience that incentivizes customers to shop beyond their first purchase.
Ready to learn how to optimize your returning customer rate and maximize your company’s bottom line? Check out our CX growth playbook, a free resource that dives into:
- 18 tactics to boost profitability by 44%
- 25+ interviews with top ecommerce stores
- Analysis of +12,000 Gorgias customers.