Repeat shoppers account for 41% of all online revenue while only making up 8% of all website visitors. Yet the majority (78%) of marketing budgets are used to attract new shoppers, and put little focus on converting existing customers into repeat shoppers.
But retailers need to be paying the same attention to retaining customers and encouraging repeat purchases as they do to attracting new customers. And there is good reason to do so:
- Increasing customer retention rates by 5% increases profit 25%-95%
- Repeat shoppers spend 3 to 7 times more per visit
- 1 repeat purchaser in the US generates the same revenue for a business as 5 single-time shoppers.
- Repeat shoppers convert at a higher rate than one-time shoppers, regardless of the website’s overall conversion rate.
Why Are Repeats Shoppers More Valuable?
Not surprisingly, the main reason that repeat shoppers are the most valuable is because they shop more than once. Not only that, but they spend more per visit as well. Convincing a customer to make a second purchase generally results in 3 times higher spending. If you can get that return customer to make a third purchase, the revenue per visit jumps to 7 times higher than one-time shoppers.
Repeat shoppers are there for you in the best of times, and in the worst of times. Research has shown that repeat shoppers typically spend more during the holiday season than any other segment. What’s even more comforting is that repeat customers are also more likely to stick with you through difficult economic periods. Research by Adobe found that while Europe was in their latest recession, the portion of revenue coming from repeat customers increased 3%. This illustrates how a solid repeat customer base can create stability for a business and offset the challenges of unpredictability and volatility.
What Can Businesses Do?
There are a number of strategies retailers can use to help increase customer retention and repeat purchases, such as an improved user experience, email marketing, loyalty programs, and retargeting.
If your user experience is bad, shoppers won’t come back. Full stop.
So if you are receiving negative feedback or are otherwise unconvinced by the quality of your user experience, then search for ways to improve it. For example, how easy and convenient is it find the product? Add the product to a cart? And then checkout? It should be as frictionless as possible. And don’t forget about your payment options! Payment is the last interaction shoppers will have with your site and poorly optimized payment methods can leave customers frustrated. Many retailers forget to recognize payment methods as part of the user experience process, and lose revenue as a result. You can avoid this by offering a simple and instant online payment option.
Loyalty Programs and Checkout Registration
Loyalty programs are one of the most well-used tools in any retention marketer’s tool box because they encourage repeat shopping. Some shared characteristics of successful loyalty programs include: integrating it into the entire experience, maximizing the difference between perceived value and real cost, and focusing on the your most profitable customers.
Checkout registration is another method for encouraging customers to become loyal repeat shoppers because it increases the amount of data you have about customers. This data will contribute to creating a personalized experience by giving you information such as the customer’s name, location, and the purchase history associated with that account. For customers, the most likely reason for them to register at checkout is so that they can make purchases faster and easier in the future.
Retargeting refers to advertising specifically to people that have visited your website. It works by placing a cookie on the user’s computer and then allowing you to target them with advertising. So why is retargeting valuable? Research has shown that each time you can convince a potential customers to visit your website, the odds of that person converting increases. And retargeting is a great way to attract customers to visit your website again. Additionally, retailers can take the information they have about repeat customers and use it to target market segments with similar demographic and psychographic profiles.
When done well, emails are a highly effective tool for encouraging repeat purchases. For instance, sending customers a purchase confirmation email with a discount on their next purchase can be an excellent technique. You can improve your emails by sending customers a discount on specific products that reflect that particular customer’s purchase history, and therefore their personal interests.
Purchase confirmation emails also have significantly higher engagement compared to regular bulk emails:
Use the information you have about customers to personalize emails as much as possible. A study by Experian shows that personalized emails are have a 29% higher open rate and a 41% higher click-through rate than unpersonalized emails, which will ultimately increase conversions.
Repeat shoppers represent a significant portion of a business’ revenue, yet tend to receive a disproportionately low amount of attention. Retailers can attain remarkable increases in revenue by placing a greater emphasis on turning one-time shoppers into repeat customers. Not only do repeat shoppers convert more often and generate more revenue for businesses on a per visit basis than one-time shoppers, but also contribute to more profitable and predictable growth.
So if you’re a retailer, consider how you can elevate your attention towards this segment and in turn, create more repeat customers.