7 Ways to Increase Repeat Sales
Tuesday July 6th, 2021
Converting more potential customers into successful buyers is ‘route one’ for growing any retail business. However, once you’re making sales, focusing solely on new lead generation becomes short-sighted. With an existing customer base of any size, figuring out how to increase repeat sales is equally vital for sustainable growth.
In this quick overview of customer retention strategies from Duologi, we’ll take a general look at why and how to increase repeat sales. We’ll also highlight and assess a few common methods for appealing to buyers who’ve already spent money with your company in the past.
What is customer retention?
Customer retention means nurturing and maintaining relationships with your buyers, and managing them effectively enough that previous customers feel inclined to spend money with your business again in future. In practice, online retention strategies can include a wide range of initiatives for turning one-off purchasers into repeat customers.
It’s a key area to focus on for any growing retailer, because it’s a much more cost-effective approach than concentrating entirely on new acquisitions all the time. In short, once you’ve invested the time, energy and money in converting a new brand new customer successfully, anything else you can do to increase the lifetime profitability of that relationship will significantly increase overall ROI for your business.
When to focus on customer retention
Aim to focus on customer retention as soon as you start making weekly sales. It’s vital to concentrate on new acquisitions at the very outset of your retail journey, but you should begin work on retention strategies as soon as you’ve earned an existing customer base to appeal to.
Early on, your initial retention strategy might be fairly low key – for example, establishing post-sale contact with the buyer through a follow-up email, perhaps thanking them for their custom and offering them a small discount on their next purchase. Later on, as your mailing lists and repeat customer numbers grow, you can increase the complexity of retention campaigns to include things like reward systems for referrals, or targeted bundle deals based on their developing purchase history.
Depending on the type of retail business you operate, returning customers can often be expected to spend more on each subsequent visit as their confidence with your brand grows. As such, there’s real value in maintaining a positive relationship and focusing on customer retention indefinitely – or at least, for as long as any previous buyer remains a potential future buyer.
Retention strategies for your business type & growth stage
Any effective customer retention strategy must continually adapt and grow with your eCommerce business. As your customer base develops and expands, your approach to buyer retention becomes more and more important, and the amount of time, money and energy you channel into it should reflect that.
There are some exceptions, of course. Notably, if your business model is based on smaller numbers of customers making one very large purchase every 10 or 15 years – or very small purchases 2-3 times a week – you’ll normally have less to gain by developing complex and labour-intensive retention strategies. On the other hand, if your store ships mid-priced products to buyers active in your market a handful of times a year, then securing their repeat custom should absolutely be among your most pressing concerns.
If your business model does merit a sharper focus on repeat custom, it ought to account for roughly 10%-20% of total outreach as soon as you’re scoring a few reliable sales per week. As those happy customer numbers start to grow, so too should your focus on buyer retention. Many retailers pulling in consistently high numbers of weekly sales will be directing as much as 50%-60% of their marketing resources towards engaging and encouraging repeat shoppers.
Again, the most commonly cited reason for this is that per-sale ROI tends to be considerably higher for a retained buyer than a first-time one. Returning customers cost far less to reach, since you’ve already established direct contact – and, provided they had a positive experience with your brand, they’re also more likely to spend larger amounts on each subsequent visit than a newcomer shopping with you for the first time.
Important customer retention metrics
The main metric to be aware of when assessing the strength of your customer retention strategy is your repeat customer rate. This is the proportion of your sales over a given period that were made by returning buyers within that period, as opposed to unique/first time customers within the same measurement window.
Note that the wider you can spread your data sampling, the more accurate and illuminating an overview of your strategy’s effectiveness you’ll get. If you can broaden out your data sampling to look at numbers for a whole year, for example, it should offer a much more helpful indication than trying to assess it over just two consecutive months.
How to calculate repeat customer rate
Calculating repeat customer rate is quite simple, and requires just two key pieces of data. Firstly, you need to know how many customers bought from you more than once (on separate occasions) within the period you’re studying. Secondly, you’ll need to know how many unique customers you served altogether in that time. (Note that this isn’t the same as the number of total transactions – it’s how many different individuals bought from you in total, including both repeat purchasers and those who only shopped with you once.)
Once you’ve figured out these two numbers, simply divide the second number by the first, as shown below:
number of customers who bought twice or more / total number of unique customers
The result of the above equation is your repeat customer rate. As an example, if you had 100 unique customers in total, and 15 of those bought more than once, your repeat customer rate for that period would be 15/100 = 0.15.
When calculating your customer retention rate, it’s also very handy to contextualise it alongside other important metrics like repeat purchase frequency (total number of orders/number of unique buyers), and average order value (total of all sales/number of orders).
How to increase repeat sales
There are dozens of ways to boost the percentage of repeat sales you get from existing customers at your business. Below are a handful of the most effective.
Build an email list
Great in the early days, when you’re just starting to secure your first few reliable weekly sales. As things grow, your email list will remain central to the growth of your retention strategy, so treat it with the importance it deserves.
Personalisation tools and plugins are a huge business now, and can have a big impact on retention rates. Once you’ve identified who your most valuable returning customers are, use personalisation tools to segment them into more specific groups. These can then be targeted to much greater effect, such as sending out offers relating to products they previously bought but that will be due for replacement soon.
Make Ordering Seamless
Any perceived hitch in the online browsing, ordering and payment process can drive down a customer’s perception of having had a satisfactory experience overall. This might potentially push them towards a competitor next time, which is obviously the opposite of what you want from a customer retention drive.
Build your systems and checkout processes around the idea of removing obstacles wherever possible, and test them regularly for optimal usability. Make sure that all features of your web retail presence work together to make the customer’s life easier: ultimately, convenience is key.
Offer customer financing
Providing your buyers with a range of flexible payment options is a great way to encourage repeat custom in future. Up to 78% of people are more likely to return to a vendor who offers finance, and the numbers increase steadily among buyers who’ve had a positive experience with customer finance in the past. Learn more about how customer finance works at Duologi, and why it might just be one of the best ways to increase repeat sales for your growing business.
Answer all questions and comments
Customer expectations today demand unprecedented levels of responsiveness, speed, and appropriate personal attention. This reflects just how easy it is to take your custom elsewhere now, with a global online marketplace only ever a button click away.
There will always be limits to what you can realistically achieve in customer attentiveness terms, but the very least you could do is offer some form of rapid response to queries and information requests. Failure to do so will almost certainly lose you potential repeat customers, so focus on building customer trust and don’t overlook these vital components of buyer aftercare.
Start a loyalty program
This can be handled in various formats – including tiered discount offers on future purchases for existing customers, opt-in VIP programs with regular rewards and discounts, or establishing some sort of points system that accumulates through multiple transactions.
Give out future-use coupons
Customers always like to feel they’re getting a little something back when they make a purchase. Encouraging them to shop with you again by providing money-off vouchers for subsequent buys is a great way to achieve this, while also increasing the chances of them becoming repeat customers in future.
To learn more about how Duologi’s retail finance solutions can help grow your eCommerce business, don’t hesitate to get in touch with a member of our expert team today.