This probably doesn’t come as a surprise, but it’s much cheaper to retain customers than it is to acquire new ones. Because clicks and conversions are continually increasing in cost, customer retention is especially important for e-commerce brands that are looking to succeed in a saturated market. This is why it’s essential to track how receptive your existing customers are by measuring purchase frequency.
Let’s take a look at what purchase frequency is, how to calculate it, and ways to increase it.
Why Is Purchase Frequency Important?
The more often your customers buy from you, the more money you’ll end up making over time. While this isn’t exactly news, it’s the name of the game in the world of marketing and business. This is why measuring purchase frequency is a must — you need to see how often customers are coming back to buy from your store. A whopping 40% of the average store’s annual revenue is from repeat customers.
Calculating Purchase Frequency
There are three calculations that’ll help you understand and increase your purchase frequency. As with most marketing measurement, the goal of calculating these numbers isn’t just to come up with a number. In the end, your metrics are only useful if they’re followed by insightful analysis and interpretation. As you’re doing the following calculations, keep in mind what they’re telling you about your customers.
Calculating repeat purchase rate: This calculation places emphasis on the purchases from repeat customers divided by all purchases on the site for a given date range. This metric is useful for determining how much value you provide a customer.
The equation looks like this:
# of customers who bought more than once (in 365 days) / # of total customers (in 365 days)
Calculating purchase frequency: Use the same time frame you chose for your repeat purchase rate (for instance, a single month), and divide your store’s total number of orders by the number of unique customers. This metric enables you to incorporate customers’ buying behaviors into your marketing plan.
The equation looks like this:
# of orders placed (in 365 days) / # of unique customers (in 365 days)
Calculating time between purchases: Time between purchases shows you how often a typical customer goes before making a repeat purchase. Using this metric, you can customize your email marketing campaigns to match the buying habits of your customers.
The equation looks like this:
365 days / purchase frequency
You did it— you calculated purchase frequency! But don’t stop there. Like we said above, gathering the data is only a step of the journey on the way to more impactful campaigns and better customer knowledge.
You can use the data as a jumping-off point to get into the following questions:
- How often does it make sense for my customers to be purchasing from my brand?
- What might be blocking my customers from purchasing from me more frequently?
- Do any of my marketing efforts impact these numbers?
Once you have those answers, you’re well on your way to developing a customer loyalty program designed to increase purchase frequency and build more profitable relationships with your customers.
Ways to Increase Purchase Frequency
When it comes down to it, increasing purchase frequency is all about building and investing in relationships with your customers. That means that you need to not only consider what you want to say to your customers but (and this is most important) what your customers actually want to hear from you. Increased frequency of marketing messages won’t necessarily lead to increased purchase frequency if you’re not communicating the right message at the right time. Here are a few methods to increase purchase frequency:
Take advantage of emails: Due to its versatile nature, email marketing is an excellent method to increase purchase frequency. With emails, you can entice users to return after cart abandonment, provide brand-related content, and shine a spotlight on new product offerings and promotions. The key to successful emails to create emails that are engaging, personalized, and helpful. Here are a few ideas:
- Ask your customers when they would like to repurchase and send them a reminder when it’s time.
- Recommend new products based on purchase history.
- Send helpful “how-to” content for how to use your products, etc. to decrease friction for new customers.
- Stay top-of-mind between purchases with useful emails full of content that your customers will be interested in.
Invest in retargeting ads: Make sure your brand is unforgettable. When a customer has already visited your site or made a purchase, you can persuade them to return and purchase again with retargeting. For example:
- Retarget with an ad featuring a product that complements a customer’s most recent purchase.
- Determine the right timeframe for customers to come back and purchase again and retarget your customers who last purchased around that time.
- Personalize your ads with their recently purchased items.
Create personalized experiences: The more personal your advertising experience, the higher your conversion rate. In fact, 88% of US marketers reported seeing measurable improvements due to personalization. Some things you can try:
- Separate your audience based on commonalities and share messages that resonate with each audience.
- Treat your repeat customers to a website experience just for them with a personalized onsite product carousel.
Increase customer satisfaction: No matter how great your marketing campaigns are, if your customers are unhappy with the service or product experience, they’ll be less likely to come back. Fortunately, there are things you can do to help. Here are some ideas:
- Use customer reviews and feedback to pinpoint and resolve issues that customers face
- Measure customer experience metrics such as Net Promoter Score (NPS), customer satisfaction score (CSAT), and customer effort score (CES).
- Identify points of friction, whether in the checkout, shipping, product use, or customer service process and create content and campaigns to help.
Build loyalty programs. Let your customers know that you appreciate their continued business with an incentive. For example, you can create a rewards system: For every purchase a customer makes, they’re rewarded with points that can be traded in for exclusive access or product upgrades.
Capitalize on special days — even the small ones: It’s crucial to take advantage of whatever special occasions you can, not just the obvious ones like Christmas and Black Friday. From Sofa Sunday to Small Business Saturday and Boxing Day, there are plenty of opportunities for unique campaigns that will re-engage your customers on email, social media, texting campaigns, and more.
Frequently Keep a Pulse On Your Customers
Keeping an eye on numbers like purchase frequency and time between purchases is incredibly valuable and is even more impactful when you pair it with a genuine desire to communicate with and help your customers. That can only happen if you’re frequently seeking and considering customer feedback and watching the data you have available to you for signs of decreased purchase frequency or return visits.
All good marketing boils down to listening to your customers and communicating with them in helpful, genuine ways. Purchasing frequency is only possible if you’re frequently working to enhance the customer experience. You already have the tools to increase your purchase frequency — whether it’s email campaigns or retargeting ads, your next step is to execute for success.
Megan is AdRoll’s Principal Product Marketing Manager who helps uncover and tell important stories to audiences inside and outside of the company. She pulls inspiration and expertise from her experience in marketing for a variety of different organizations, including agencies, technology, education and more. In her free time, she enjoys running (preferably in the beautiful Utah mountains), chasing her two kids and reading anything and everything.