In a series of benchmark studies conducted by RJMetrics in late 2015, acquiring repeat customers is of utmost importance as you scale. Repeat customers specifically touch on metrics such as lifetime value and average order value. In addition, there are enlightening numbers in their findings.
Top performing companies generate 3.5 times more monthly orders. This difference does not come from more marketing dollars alone. Top performing companies are great at acquiring new customers, but they also have a product good enough to keep customers coming back again and again.— RJ Metrics
And that’s really where the rubber meets the road. How should eCommerce businesses keep customers coming back? Can you foster an experience for your first time purchasers where the end result is always a need to buy again? If you have competitors selling similar products, how can you foster brand loyalty so that the next considered purchase will come through your door, rather than your competitors’?
As software developers ourselves, we pay a lot of attention not just to the first overall experience, sometimes known as on-boarding, but also to what users do in our app immediately after becoming a “paid” user. The price of entry is merely the beginning. For us, we constantly measure how quickly a user can get acquainted to our product(s) and realize value.
For eCommerce, we should also strive to answer the same question:
“What is the most efficient way possible to help new customers love our brand and become repeat customers?”
There’s justification for this too, new customers are expensive to acquire. But excelling at getting existing customers to buy more is measurably cheaper, roughly 15% — 33% cheaper according to RJMetrics.
Still not convinced? BigCommerce also summarized a similar study conducted by RJMetrics and found that in terms of:
- average order values, top customers (repeat customers) generate somewhere between 3x to 5x more than your typical customer base.
- number of purchases, top customers make up at least 43% to 75% of overall sales.
- dollars spent, top customers spend almost 30x more than the average customer.
Simply put,
Companies that excel at turning one-time buyers into repeat purchasers have more profitable, sustainable businesses, with higher lifetime values. — RJMetrics
Successful eCommerce brands are also able to quickly ramp up repeat customer orders faster. That means they’re doing more than just creating a good product that people want to buy. They’re also actively engaging paying customers in a way that fosters more purchases. The graphic below is a visual representation of top performing eCommerce companies’ growth trajectory split by first time customers and repeat customers. Within 12 months of launch, repeat customers dominate the revenue growth curve by a significant margin. As you grow, more marketing means more costs. Increasing customers’ overall lifetime value is key.
Source: Medium
