How to increase your Ecommerce customers’ purchase frequency?

What I’m about to say is going to blow your mind, so I hope you’re sitting down.

Ready?

Here it is:

The more often your customers buy from your eCommerce store, the more money you’ll end up making over time.

Okay, okay…so that wasn’t all that earth-shattering.

After all, increasing sales is basically the name of the game in the world of business.

Still, there’s a huge difference between increasing sales by any means necessary, and doing so specifically by getting your current customers to increase their purchase frequency.

Why is it Important to Increase Purchase Frequency?

First of all, it’s much cheaper to get your current customers to make additional purchases down the road than it is to acquire new customers.

It actually costs 5x as much to acquire a new customer than to keep an existing one

It actually costs 5x as much to acquire a new customer than to keep an existing one.

Additionally, it’s much more probable that those who have purchased from your company in the past will do so again (compared to those who are yet to make an initial purchase):

The probability of selling to existing customer is much higher than to the new prospect

Plus, it’s easier to sell to existing customers!

So, it’s not just that getting your current customers to make repeat purchases is more cost-effective than getting newcomers to make a purchase; it’s actually easier to do so, as well.

How To Calculate Purchase Frequency?

Taking this a step further, the more purchases an individual customer makes, the more likely they are to make another purchase in the future. Here’s how you could easily calculate your customers’ purchase frequency:

To see the probability of customers that made (x) orders to make (x+1) orders, simply divide the number of people who’ve made at least (x+1) purchases by the number of people who have made at least (x) purchases.

Here’s a more concrete example:

How to calculate order frequency according to RJ MetricsHow to calculate order frequency
Now, let’s say we want to know the probability of getting a three-time customer to make a fourth purchase. Even if our data shows that one of our customers have made a fourth purchase, the probability would be:

(30 + 10 +1) / (90 + 30 + 10 + 1) = 0.3129 = 31.29%

Again: the more purchases a given customer makes, the more likely they are to make yet another purchase in the future. Circling back to profitability and cost-effectiveness, it simply makes sense from a mathematical perspective to focus your marketing efforts on those who have already done business with your company in the past.

(Not to mention, of course, that those who are familiar and satisfied with the value you provide are inherently more likely to continue doing business with you.)

Another point worth mentioning is that increased purchase frequency has been found to have the highest impact on growth for eCommerce companies just getting off the ground:

Retail KPIs' Effectiveness of Order Frequency chart

Increased purchase frequency has the biggest impact on growth for eCommerce companies.

As we alluded to earlier, repeat customers are much more valuable to a company than one-off customers. More surprisingly, the above data shows that order frequency is more than two times more important to business growth than average order value.

(When you think about it, this makes sense: The customer who makes three $10 purchases is worth twice as much as the customer who makes one $15 purchase.)

What’s more, MarketingCharts.com also found that repeat customers tend to spend way more per transaction than one-off customers. While first-time customers spend an average of $1.73 per transaction, the average order value for customers with a history of repeat purchases is a whopping $10.67.

So…if it’s not clear by now:

You need to have a heavy focus on generating repeat purchases from your existing customers. Moreover, since the probability of them making another purchase increases with each transaction, you want to get them to put effort into getting them to do business with you as often as possible.

In this article, we’re going to discuss how to do so from both a high-level vantage point, as well as via a number of “in-the-trenches” tactics.

Let’s dive in.

How Do You Increase Your Ecommerce Customers’ Purchase Frequency?

Before we get into the more specific marketing tactics to implement while aiming to increase your purchase frequency, it’s important to discuss the more overarching factors that will lead your customers to want (and/or need) to make more repeat purchases in the first place.

1. Sell Products That Require Repeat Purchases

This is probably pretty obvious, but it’s definitely worth mentioning up-front:

If the products you sell don’t require that your customers come back to your eCommerce store at some point, you probably don’t have that great a shot at increasing their purchase frequency.

The good news, though, is that pretty much every product in existence will require some sort of repeat purchase at some point in the future. If someone buys two Subaru Legacies over the span of fifteen years, they’re still technically a repeat Subaru customer!

Of course, some products are much more suited to the purpose of making repeat sales more often, such as:

  • Consumables
  • Products that degrade through use (“wear and tear”)
  • Products that are updated/upgraded on a regular basis

Again, though:

Depending on how far you “zoom out” timewise, this really does encompass every product on the planet. We’ll get back to this in a moment.

At any rate, it’s also worth mentioning that you do not want to artificially inflate your repeat purchase numbers by implementing planned obsolescence into your products. While this might get some customers to come back a second time, more often than not they’ll simply head to a competitor whose products are more durable and provide more value than yours.

2. Sell Products That Complement One Another

Another key way to get your customers to purchase more often from your company is to provide smaller accessory-type products that complement your main offerings.

Offering such supplementary items provides you with the opportunity to make cross-sell offers to your customers either:

  • Immediately after they’ve made a purchase
  • After they’ve gotten some initial value from their original purchase
  • After a period of inactivity on their end

As we alluded to in the previous section, the times in which your customers make larger purchases (i.e., of your more valuable “main” products) are likely to be few and far between. By offering products that complement these larger purchases, you’ll increase the chances that your customers will come back to you more often in between making these larger purchases.

Dollar Shave Club send out this email to generate awareness for items that cross-sell nicelyDollar Shave Club send out this email to generate awareness for items that cross-sell nicely with the shaver cartridge ordered. 

Above all else, you want to be sure these accessories actually enhance the value of the initial product in some way or another. Again, your goal isn’t to simply make more sales more often; it’s to provide ongoing value to your existing customers so that they want to purchase from you more often.

3. Understand What “Repeat Business” Means in Your Industry

As we said earlier, what’s considered a “good” purchase frequency depends on the industry you operate in.

Again, this goes back to the idea of product longevity (i.e., “wear and tear,” uses/servings per container, etc.). Obviously, an eCommerce company selling toothbrushes and toothpaste will have more opportunities to make repeat sales than a company that sells diamond rings.

But that (obviously) doesn’t mean repeat purchases don’t happen in the jewelry industry. And it also doesn’t mean this hypothetical jewelry company shouldn’t aim to get their current customers to come back more often (again, this is where cross-selling and other such tactics come into play).

Upgrade programe

If Blue Nile could entice their customers to buy again, so could you

To really get a handle on what a “good” repeat purchase rate for your company is, there are a couple things you need to consider:The first is your industry “standard” repeat purchase rate. We put “standard” in quotation marks because…well…it’s not always all that easy to determine. More typically, it’ll be easier to find press releases and other media regarding the retention rates, etc. of top-performers in your industry. To that end, you’ll want to aim high enough to compete with the unicorns in your niche (which you should always be doing anyway!).

If you’ve been in business for some time, and have a solid foundation of recurring customers, you can also look inward to gauge how often your customers typically buy from you. Here, you want to use your most valuable customers as a benchmark – not your “average” customers.
Remember: the more purchases a customer makes, the more subsequent purchases they’re likely to make. In other words, all of your customers have the potential to be VIPs; it’s up to you to get them to that level.

Perhaps the best way to summarize these overarching pieces of advice is to say this:
As long as you offer value to your customers on their terms, they’ll be more likely to make additional purchases from your company.
For companies that sell consumables with short lifespans, this may mean simply offering more of said product on an ongoing basis. For those that sell “longer-living” products that don’t require frequent repeat purchases, this means offering other items to fill the gaps in between.

Once you have this part figured out, you’ll be ready to start implementing the more “on-the-ground” tactics we’ll discuss in the section to follow.

Also read: 10 Surprising Ways Affiliate Marketing Will Transform Your Ecommerce Business

Source: https://www.growcode.com/blog/purchase-frequency/?utm_campaign=Submission&utm_medium=Community&utm_source=GrowthHackers.com

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