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Return Customer Rate: What Is It And How To Improve It Effectively

It's difficult to find new clients nowadays, and customer acquisition expenditures have risen by more than 50% during the last five years. Keeping an existing customer -costs five times less than acquiring a new one. When retailers splash large sums of money into Facebook Ads and Google Adwords, they entice consumers to repurchase at least "twice in not less than two encounters". To benefit from the returning customers, enterprises must re-evaluate their return customer rate.

In E-commerce, new and repeat customers are the two main groups of buyers. Evaluating the customer retention rate will help determine what proportion of customers return to the store to make additional purchases. Among the most effective ways to boost brand reputation and customer loyalty is to optimize the repeat purchase rate so that you gain the maximum value from every returning customer.

To determine whether you have to divert your attention to this area, an idea of your store's retention rate is crucial. In this article, you will learn what return customer rate is all about and how to calculate and improve it significantly. Let's get started!

What Is Return Customer Rate?

Return Customer Rate

Return customer rate is the total number of consumers (customers) a business keeps over time. Also, it represents the proportion or percentage of a company's clients who stick with it within a specific period. Although the metric appears straightforward at first glance, it offers important insights into potential growth and enhancement areas.

To prevent your estimates from being altered, you must also consider any new clients you acquired. That is, if you begin with 20 clients, lose eight, then gain nine, that does not imply that your customer retention rate is 110%. Therefore, to measure the effectiveness of a company's customer service program and marketing strategy, tracking retention or loyalty metrics is essential.

How Do You Calculate Return Customer Rate?

The computation of the return customer rate accounts for repeat customer transactions divided by all website purchases for a specified period. The formula for calculating the return customer rate or repeat rate is;

Example 1: Mercedes Limited has 200 customers, and 50 have made multiple purchases over two years. What is the repeat customer rate?

From the question above;

Total customers = 200

Total of repeat customers = 50

Repeat customer rate = (Total number of repeat customers / Total customers) X 100%

Therefore, Repeat customer rate = (50/200) X 100% = 25%

Example 2: Walmart Inc has a customer base of 300 users in their store. Of those, 50 haven't bought anything, 168 have done so once, and 82 have done so twice or more. Calculate the return customer rate.

Note: Pay very careful attention to the solution below.

In this case;

Return customer rate = (total of repeat customers who purchased twice or more / Total number of paying customers who bought one or more times) x 100%

Number of repeat customers that purchased  2+ times = 82

Number of users that have bought 1+ times = 168 + 82 = 250

Return customer rate = (82/250) X 100% = 32.8%

Note: Monitoring the customer retention rate on a monthly, weekly, or daily basis can show whether your attempts to increase client loyalty are productive. 

What Is A Good Return Purchase Rate?

Based on the product mix and consumer categories you're serving, each sector has a varied range of "acceptable" rates, which differs for different stores. A repeat purchase percentage between 19.87% to 39.6% is a reasonable level for small and medium-scale retailers. According to Squarespace, a repeat purchase rate above or equal to 27% is a decent benchmark to target.

How Do I Increase Return Customer Rate in E-commerce?

Increase Return Customer Rate

What should a company do first to boost repeat purchases, reduce customer churn rate, and cut costs associated with customer acquisition? Get a grip on measures for improving customer lifetime value. Understanding the proper KPIs makes it simpler for a business to integrate customer and marketing service into its existing customer retention plan. 

The most effective strategies to implement to witness outstanding results are;

  1. Prioritize Customer Feedback

Ensure that your retention strategy incorporates consumer feedback. However, listening to the consumers who give your company their money and time might not be as easy to measure as a KPI or retention rate. But, their opinion will assist you in developing a more comprehensive customer experience that will encourage more repeat purchases.

  1. Create Email Lists and Send Follow-Up Messages Afterwards

Emails serve as your buyers' text-like alerts that inform them about some great deals and let them know -how valuable they are to your enterprise. When customers make purchases from your store, they will leave their contact information. To begin targeting the appropriate group of audiences, it is your responsibility to organize the contact information and build the email list.

The crucial period of opportunity to stimulate a return purchase is immediately after a customer's initial order. Craft a follow-up reminder email outlining the extras they can add to their order.

  1. Offer Elite Membership

For most enterprises, it's the best approach to keep clients returning to buy more. Retailers of all sizes and in any industry can offer users the freedom to enlist themselves into a unique product tier. This option is not exclusive to only Mcdonald's alone. For instance, a shopper who is prepared to pay for special privileges will utilize it as fast as possible; thus, an elite membership club can help tremendously in generating repeat customers.

If you choose to try out the membership alternatives, implement these three to-dos in the project plan;

  • Create membership rewards that can be supported over a longer-term by your business strategy.
  • Use some plugins, apps, and perhaps even some customized code to set up and develop the software. After that, test it repeatedly.
  • Unveil the initiative and aggressively promote it. Make it clear via every page on your website; what they will be losing out on by not subscribing to the elite program.

You can add captions like: "For $49.99 per 90 days, you will get prioritized fulfillment,  free shipping, and added rewards.

  1. Launch A Reward Points Campaign

Launch A Reward Points Campaign

A unique reward-point program is among the simplest methods to encourage clients to rethink making a repeat purchase from your store. Enterprises can create their point-based system and establish the criteria on how clients can use them. The options might include receiving -specific free stuff or a cash discount.

When you've chosen the points-based system and turned on the campaign, you can also send automated notifications to all customers when they have earned additional points and if they already have accumulated points to qualify for specific incentives.

  1. Tracking Return Customer Rate With Converted.In

Tracking Return Customer Rate With Converted.In

Although Repeat Customer Rate might seem simple to compute, it's crucial to remember that it's just one of the different useful indicators used to monitor your customer retention success. Try ConvertedIn tool if you want to avoid spending hours at the end of every month wrangling with data from your Amazon store accounts.

Converted.In can assist you in creating a robust dashboard to track your statistics and provide an overview of how your important metrics (including the Repeat Purchase Rate) alter over a given period.

  1. Evaluate The Organic Traffic Channel

Did consumers who made purchases using Facebook ads outperform those who arrived through organic search in terms of repeat purchases? Was the mobile content effective? For a fact, these data are often difficult to access, but by using the ConvertedIn tracking application, it will become easier for you to dig out channels that send in customers with a higher repeat purchase rate.

Utilize this information while determining your advertising budget. Invest more into channels that increase your customer's lifetime value.

  1. Utilize Retargeting Ads

Retargeting ads campaign, as the name implies, are designed to target a certain group of potential consumers that may have seen an ad in the past. Although, you can choose to display the adverts to first-time purchasers as your target audience. You can replicate the ad pattern and generate more sales with these ads by using the analytics tool data. Unsurprisingly, the result-oriented ads campaign performs significantly better than non-optimized ones.

What Is The Difference Between Churn Rate And Retention Rate?

The churn rate measures the proportion of customers that discontinue using a service or cease to carry-out trade with a certain company. Enterprises can also use the metric to gauge the number of workers that leave their organization. In contrast;

Customer retention rate is the proportion (rate) at which a company retains its regular clients or purchasers. The metric assists e-commerce retailers in gauging the success of their marketing initiatives and customer retention plans.

What Next?

Indeed, there are various strategies you can deploy to make customers return for additional purchases. Still, the ultimate is to provide a delightful experience from the time they shop until they receive their order and back it up with products or services that remain true to your promises.

If I may ask you, which of the techniques will you try out beforehand?