What is repeat purchase rate?
How is it calculated?
One workable version: count the customers who placed two or more orders in the period, then divide by all customers who ordered in that period. The formula is the easy part. The choices around it are not.
Now change the period. Over six months, fewer people have had time to come back. Over three years, more have. The same customers give a different rate. So a repeat purchase rate quoted with no period means little.
Different data can also give different answers. Do you count customers or orders? Do you count the first order in the period or across all time? Pick one and write it down. Which formula to use is covered in repeat purchase rate formula.
Why does it matter for a shop?
Customers who come back spread the cost of winning them over more orders. That is the link to LTV (customer lifetime value) and to payback period: how many months until the margin from a customer repays the cost of winning them. See also LTV to CAC ratio pitfalls.
Rate is also easy to flatter. Customers acquired on a heavy discount may behave differently from the rest. Split the rate by how customers were acquired before you rely on it. Cohort analysis does this by grouping customers by their first month and following them over time.
For ZFD: A repeat order only helps if it leaves contribution margin. Discounted repeat orders may not.
Worked example
Easily confused with
Repeat purchase rate vs Retention
The share of customers who buy again within a given period, usually tracked by cohort. It is close to repeat purchase rate but not the same measure, so check the definition in each report.
Repeat purchase rate vs Repeat order rate
Can mean orders rather than customers. Check the denominator.
Repeat purchase rate vs LTV
What a customer is worth over time. Repeat purchases feed it. They are not the same number.
FAQ
What is a good repeat purchase rate?
It depends on what you sell and over what period. We do not give a number here, because a figure without your period and product is not comparable.
Is repeat purchase rate the same as retention rate?
They are close but not identical. Retention is usually tracked by cohort over time. Always check how each report defines it.
Sources
- What is the Repeat Purchase Rate?Blog or media
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Next step. See how revenue and margin diverge. Use the Is your ROAS real? calculator.