As a D2C brand owner, your top priority is focused on creating a great website design, improving search rankings, and acquiring more customers while lowering customer acquisition costs.
However, did you know that boosting the percentage of customers who make repeat purchases is the north star for industry-leading D2C brands?
To understand the importance of ecommerce repeat purchase rate, let’s dive into some interesting stats:
- Customer acquisition can cost up to 7 times more than selling to existing customers.
- Increasing the customer retention rate by 5% increases the profits by 25 to 95%.
Aren’t these numbers just breathtaking!?
James Petrellis, an experienced performance marketing entrepreneur who started his pet brand Mighty Munch, said on a DTC podcast:
“We sell a product that is a problem solution product. It solves a problem for people that’s why they buy it. So if a product solves a problem then there’s a good chance a lot of these guys will come back and keep buying it. So you need to get your product right first.”
After nailing the product, there are so many things a brand can do to increase the percentage of customers who make repeat purchases. But before we get to that point, let’s first examine the math that needs to be done.
How to calculate Repeat Purchase Rate (RPR)?
For example, if your brand has 1,000 customers, and 400 have made repeat purchases, the repeat purchase rate would be 40%.
Brands should track RPR on a regular basis as this is an important indicator of whether your efforts at boosting customer loyalty are paying off.
Alex Schultz, former vice president of growth at Facebook says:
“If you can get 20 – 30% of your customers coming back every month and making a purchase from you, then you should do pretty well.”
Even other research studies tell us that the average ecommerce repeat purchase rate is 28.2%. As a brand, if your repurchase rate is below par with the industry standards then it’s time to incentivize purchases from your store and actively encourage one-time customers to buy again.
So how can you keep customers coming back to your website in an ecommerce world that is both extremely competitive and constantly evolving? The secret lies in creating a system that encourages customers to make repeat purchases.
How to increase repeat purchase rate?
Here are 12 tips to increase repeat purchase rate:
1) Personalize store experience
71% of customers expect brands to deliver personalized interactions. By combining behavioral and real-time data of its customers a brand can personalize the store experience of their shoppers who are visiting the store for the second time.
Take Zalando for example, an online retailer of shoes, fashion, and beauty. They do an amazing job of personalizing the store experience for their customers. If you visit their website for the second time, a “Pick up where you left off” icon appears on the main page. Reminding shoppers of what they were looking for during their last session is a great way to increase the chances of repeat purchases.
2) Show hyper-personalized product recommendations
Offering suggestions for similar products is not a new thing. For years, Amazon has relied on this strategy to increase customer lifetime value (CLTV). Recommending related products to your customers can significantly boost the conversion rate, help you regain lost customers, and increase the average purchase value of your online store.
Hyper-personalization makes customers feel heard and increases their chances of purchasing again. Think of every email and SMS communication as an opportunity to engage with the customer meaningfully, to get them excited about their next purchase, and to help them.
Using CDPs and marketing automation together can help brands boost their repeat purchase rates by providing customers with hyper-personalized experiences at every step of their journey.
Below is a sample of a post-purchase product recommendation flow:
Read on to know more about product recommendation use cases in ecommerce
3) Build a top-notch customer loyalty program
If you have a loyalty club, you can, and should, use discounts to reward loyal customers and encourage them to buy from you more.
H&M offers special discounts and free shipping to its club members. Check out the way they create brand loyalty by offering exclusive benefits.
Sephora’s Beauty Insider is another very popular loyalty program in the DTC space. Customers who sign up for this program account for up to 80% of the brand’s annual sales.
The high prices of Sephora’s products are a barrier for many shoppers. However, Beauty Insider members can redeem rewards points for gift cards and discounts to offset production costs.
Sephora is able to give customers the deals and products they want without diminishing the perceived worth of their products because it allows loyal members to choose the reward for which they are eligible.
Continue reading The Essential Guide to DTC Customer Loyalty Programs
4) Cross-sell on transactional emails
On average, most transactional emails have an open rate of 80-85%. Brands can take advantage of this and include relevant product recommendations to cross-sell.
Use dynamic data to tailor each transactional email to the customer, rather than blasting out a generic offer or product.
An order confirmation email for a book could suggest similar best-sellers in the same genre the customer purchased.
5) Automate win-back email series
Using a win-back campaign, you can re-engage customers who have previously purchased from your store and currently are inactive. But why should brands send win-back campaigns?
Because you have 60 to 70% chance of making a sale to an existing customer. To make the most out of this opportunity, marketers should automate a win-back email series.
Unlike a single win-back email, an automatically triggered email sequence lets you try more than one way to get a customer back to your store. This makes sure that most of your inactive customers don’t become lapsed customers.
Here’s an illustration of a win-back flow:
Your win-back series should be based entirely on time, the lifecycle of your product, and the customer’s usage patterns. Ideally, the win-back emails should include your D2C brand:
- Colors and imagery
- Story – why do you do what you do?
- One and only one CTA
- Exclusive win-back offer, an invitation to join your brand’s community, first access to the latest products and deals, etc.
Birchbox, an online subscription service that specializes in makeup and other beauty-related products, has got its win-back emails on point.
6) Use subscription strategy
According to the Subscription Trade Association, 75% of DTC brands will offer subscription services by 2023. That’s not surprising as subscription service seems to be a natural fit for brands selling consumer goods or refillable products.
Hundreds of companies, like Birchbox, BarkBox, and Boxycharm, thrive using a purely subscription-based ecommerce model. Adopting the subscription strategy allows you to create long-term relationships with customers, maximizing their lifetime value.
Dollar Shaving Club, a men’s lifestyle brand, offered a subscription-based plan that triggered automatic repeated sales. They expertly offer flexibility through 3 different subscriptions, varying in price: Good, better, best.
To learn more about subscription strategy read on how to scale your DTC business through subscription model.
7) Giveaway product samples
Product sampling is one of the oldest and most effective marketing tricks, and for a good reason: it works. It encourages shoppers to try something new without having to pay full price for the item.
According to a report from research firm Sampling Effectiveness Advisors, 73% of consumers said they were likely to buy a product after trying it.
Many D2C brands like Plum, Sugar Cosmetics, Renee Cosmetics, Re-equil, and DermaCo, offer samples of their products when an order exceeds a certain amount. This not only increases the likelihood of repeat purchases but also helps establish customer loyalty.
Melina Polly, co-founder, and CEO of the perfume brand Henry Rose said that;
“The company’s conversion from its Discovery Set (of five fragrances in 2-milliliter sample sizes) to full-size 50-milliliter bottles is in the high “double digits.” Beyond getting to try a variety of scents in the Henry Rose Discovery Set, customers receive a $20 credit to apply toward their first $120 purchase”.
Using this strategy, the brand is able to effectively upsell its high-end products while also increasing the average order value by including a discount offer.
8) Better Packaging
Delivering a great unboxing experience can help brands create a lasting impression in their customer’s minds, and this will keep the brand’s name on top when they need to repurchase. Sending customers a personalized message like a thank you note or even a guide on how to use your product is a great way to build an instant connection with them. Choose eco-friendly, easy-to-dispose packaging. It must be strong and durable enough to deliver the item safely.
Take Burst Oral Care, for example, a brand that puts its toothbrushes aesthetically inside its boxes to provide customers with a memorable unwrapping experience.
9) Create more targeted coupon codes
You already know that discount coupons are a great way to get more sales. However, brands can use this more strategically by giving each customer a unique coupon that can only be used on the second purchase and any that follow.
You can offer personalized coupon codes to customers based on their RFM ratings. Tools like HubSpot, Voucherify, and Magento allow you to generate more targeted coupon codes for your segmented audience in just a few clicks.
For instance to get more repeat purchase Benefit Cosmetics created referral discount coupons.
10) Set up a hassle-free return & exchange process
Ecommerce returns can be like a disease that eats away at your profit margins, kills your conversion rates, and puts your business at risk. In 2020, people returned products worth $428 billion, which was a little more than 10% of all retail sales.
Returning an item purchased online shouldn’t be a hassle. In fact, the way you manage returns can become a key differentiating factor from the competition.
Research shows that 60% of online customers prefer free return shipping, and 51% prefer a hassle-free return policy.
These days many brands are offering exchange options to their customers. Chances are that many of them would like the same product in a different style, color, or size.
Activewear brand Outdoor Voices provides an easy exchange option for their products.
By turning returns into exchanges, brands can recover lost purchases and make sure that their repeat purchase rate isn’t affected.
You should also consider using software for handling ecommerce returns Loop, Happy Returns, and Returnly.
They offer automated returns, new product exchanges, and a fully customized portal, to make returns easier for both the brand and the customers.
11) Use customer retention surveys
Repeat business can be boosted through market research. Why? Because learning more about your target audience will help you better serve them.
If you’re conducting market research, a survey is the way to go because you have complete freedom in the questions you ask.
With the knowledge gained from the customer retention survey, you’ll be able to better understand your customer retention rate, which is directly correlated to the frequency with which customers make repeat purchases.
Here’s an example of what a customer retention survey should look like:
12) Provide excellent support
The importance of quality support that you provide to your customer can never be understated. As per Salesforce Research, 89% of customers are more likely to make another purchase after a positive customer service experience. Moreover, 61% of customers say they would switch to a new brand after one bad experience.
Even if your D2C business can’t offer support around the clock, making yourself available through the channels your customers prefer, like email, online chat, or live chats on social networks, can help.
This may not boost your RPR directly, but it makes sure your customers keep buying because their previous interactions with the brand were hassle-free with amazing support!
Keep Experimenting (Bonus Tip)
In a continuously evolving DTC landscape, you need to keep innovating your Retention strategies. A great example is brands using shipping products like Wonderment, who’s customizable order status tracking pages are being used for cross-selling.
As Blake from the Wonderment said it recently:
Wrapping up!
Due to the fact that there are 120,000 DTC brands in the US alone, the ecommerce ecosystem is very competitive, and you must win the loyalty of your customers on a consistent basis.
If you use the tips shared in this blog and keep an eye on your customer retention data, you should be able to improve your sales and your repeat purchase rate to new heights.
To start giving your customers great experiences, Sign up for Lifesight now.
