{"id":1532330,"date":"2024-01-14T09:42:43","date_gmt":"2024-01-14T14:42:43","guid":{"rendered":"https:\/\/www.practicalecommerce.com\/?p=1532330"},"modified":"2024-01-14T15:48:28","modified_gmt":"2024-01-14T20:48:28","slug":"5-profit-boosters-from-repeat-buyers","status":"publish","type":"post","link":"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers","title":{"rendered":"Profit Boosters from Repeat Buyers"},"content":{"rendered":"

Businesses love new customers, but repeat buyers generate more revenue and cost less to service.<\/p>\n

Customers need a reason to return. It could involve inspired marketing, outstanding service<\/a>,<\/a> or superior product quality. Regardless, the long-term viability of most ecommerce shops requires folks who purchase more than once.<\/p>\n

Here’s why.<\/p>\n

Higher Lifetime Value<\/h3>\n

A repeat customer<\/a> has a higher lifetime value than one who makes a single purchase.<\/p>\n

Say the average order for an online shop is $75. A shopper who buys once and never returns generates $75 versus $225 for a three-time buyer.<\/p>\n

Now say the online shop has 100 customers per quarter at $75 per transaction. If just 10 shoppers buy a second time at, again, $75, total revenue is $8,250, or $82.50 each. If 20 shoppers return, revenue is $9,000, or $90 each on average.<\/p>\n

\"Smiling

Repeat customers are really happy.<\/p><\/div>\n

Better Advertising<\/h3>\n

Return on advertising spend \u2014 ROAS \u2014 measures a campaign’s effectiveness. To calculate, divide the revenue generated from the ads by the cost. This measure is often shown as a ratio, such as 4:1.<\/p>\n

A shop generating $4 in sales for every ad dollar has a 4:1 ROAS. Thus a business with a $75 customer lifetime value aiming for a 4:1 ROAS could invest $18.75 in advertising to get a single sale.<\/p>\n

But $18.75 would drive few customers if competitors spend $21.<\/p>\n

That’s when shopper retention and CLV come in. If the store could get 15% of its customers to buy a second time at $75 per purchase, CLV would increase from $75 to $86. An average CLV of $86 with a 4:1 ROAS target means the shop can invest $22 to acquire a customer. The shop is now competitive in an industry with an average acquisition cost of $21, and it can keep new customers rolling in.<\/p>\n

Lower CAC<\/h3>\n

Customer acquisition cost stems from several factors. Competition is one. Ad quality and the channel matter, too.<\/p>\n

A new business typically depends on established ad platforms<\/a> such as Meta, Google, Pinterest, X, and TikTok<\/a>. The business bids on placements and pays the going rate. Lowering CACs on these platforms requires above-average conversion rates from, say, excellent ad creative or on-site checkout flows.<\/p>\n

The scenario differs for a merchant with loyal and presumably engaged customers. These businesses have other options to drive revenue, such as word-of-mouth, social proof, events, and contest marketing. All could have significantly lower CACs.<\/p>\n

Reduced Customer Service<\/h3>\n

Repeat shoppers<\/a> usually have fewer queries and service interactions. Folks who have purchased a t-shirt are confident about fit, quality, and washing instructions, for example.<\/p>\n

These repeat buyers are less likely to return an item \u2014 or chat, email, or call a customer service department.<\/p>\n

Higher Revenue<\/h3>\n

Imagine three ecommerce businesses. Each acquires 100 customers per month at $75 per average order. But each has a different customer retention rate.<\/p>\n

Shop A retains 10% of its customers each month \u2014 100 total customers in month one and 110 in month two. Shops B and C have a 15% and 20% monthly retention rates, respectively.<\/p>\n

Twelve months out, Shop A will have $21,398.38 in sales from 285 shoppers \u2014100 are new and 185 are repeat.<\/p>\n

In contrast, Shop B will have 465 shoppers in month 12 \u2014100 new and 365 repeat \u2014 for $34,892.94 in sales.<\/p>\n

Shop C is the big winner. Retaining 20% of its customers monthly would result in 743 customers in a year and $55,725.63 in sales.<\/p>\n

To be sure, retaining 20% of new shoppers is an ambitious goal. Nonetheless, the example shows the compound effects of customer retention on revenue.<\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t
Month<\/th>Shop A: 10%<\/th>Shop B: 15%<\/th>Shop C: 20%<\/th>\n<\/tr>\n<\/thead>\n
<\/td>Customers<\/td>Revenue<\/td>Customers<\/td>Revenue<\/td>Customers<\/td>Revenue<\/td>\n<\/tr>\n
0<\/td>100<\/td>$7,500.00<\/td>100<\/td>$7,500.00<\/td>100<\/td>$7,500.00<\/td>\n<\/tr>\n
1<\/td>110<\/td>$8,250.00<\/td>115<\/td>$8,625.00<\/td>120<\/td>$9,000.00<\/td>\n<\/tr>\n
2<\/td>121<\/td>$9,075.00<\/td>132<\/td>$9,918.75<\/td>144<\/td>$10,800.00<\/td>\n<\/tr>\n
3<\/td>133<\/td>$9,982.50<\/td>152<\/td>$11,406.56<\/td>173<\/td>$12,960.00<\/td>\n<\/tr>\n
4<\/td>146<\/td>$10,980.75<\/td>175<\/td>$13,117.55<\/td>207<\/td>$15,552.00<\/td>\n<\/tr>\n
5<\/td>161<\/td>$12,078.83<\/td>201<\/td>$15,085.18<\/td>249<\/td>$18,662.40<\/td>\n<\/tr>\n
6<\/td>177<\/td>$13,286.71<\/td>231<\/td>$17,347.96<\/td>299<\/td>$22,394.88<\/td>\n<\/tr>\n
7<\/td>195<\/td>$14,615.38<\/td>266<\/td>$19,950.15<\/td>358<\/td>$26,873.86<\/td>\n<\/tr>\n
8<\/td>214<\/td>$16,076.92<\/td>306<\/td>$22,942.67<\/td>430<\/td>$32,248.63<\/td>\n<\/tr>\n
9<\/td>236<\/td>$17,684.61<\/td>352<\/td>$26,384.07<\/td>516<\/td>$38,698.35<\/td>\n<\/tr>\n
10<\/td>259<\/td>$19,453.07<\/td>405<\/td>$30,341.68<\/td>619<\/td>$46,438.02<\/td>\n<\/tr>\n
11<\/td>285<\/td>$21,398.38<\/td>465<\/td>$34,892.94<\/td>743<\/td>$55,725.63<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n","protected":false},"excerpt":{"rendered":"

The long-term viability of most ecommerce shops requires customers who purchase more than once.<\/p>\n","protected":false},"author":391,"featured_media":1532335,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_wp_rev_ctl_limit":""},"categories":[58303],"tags":[],"class_list":["post-1532330","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-customer-retention",""],"acf":[],"yoast_head":"\nProfit Boosters from Repeat Buyers - Practical Ecommerce<\/title>\n<meta name=\"description\" content=\"The long-term viability of most ecommerce shops requires customers who purchase more than once.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Profit Boosters from Repeat Buyers\" \/>\n<meta property=\"og:description\" content=\"The long-term viability of most ecommerce shops requires customers who purchase more than once.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers\" \/>\n<meta property=\"og:site_name\" content=\"Practical Ecommerce\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/practicalecommerce\" \/>\n<meta property=\"article:published_time\" content=\"2024-01-14T14:42:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-14T20:48:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.practicalecommerce.com\/wp-content\/uploads\/2024\/01\/011324-featured-repeat-shopper.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"360\" \/>\n\t<meta property=\"og:image:height\" content=\"240\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Armando Roggio\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ecommerceboy\" \/>\n<meta name=\"twitter:site\" content=\"@practicalecomm\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Armando Roggio\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers\"},\"author\":{\"name\":\"Armando Roggio\",\"@id\":\"https:\/\/www.practicalecommerce.com\/#\/schema\/person\/357c476238d0b5e19bd0a0bfacefe722\"},\"headline\":\"Profit Boosters from Repeat Buyers\",\"datePublished\":\"2024-01-14T14:42:43+00:00\",\"dateModified\":\"2024-01-14T20:48:28+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers\"},\"wordCount\":558,\"publisher\":{\"@id\":\"https:\/\/www.practicalecommerce.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.practicalecommerce.com\/wp-content\/uploads\/2024\/01\/011324-featured-repeat-shopper.jpg\",\"articleSection\":[\"Customer Retention\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2024\",\"copyrightHolder\":{\"@id\":\"https:\/\/www.practicalecommerce.com\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers\",\"url\":\"https:\/\/www.practicalecommerce.com\/5-profit-boosters-from-repeat-buyers\",\"name\":\"Profit Boosters from Repeat Buyers - 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