Repeat Purchase Rate
The percentage of customers who made at least a second purchase. A gauge of product-market fit and experience quality. Healthy: 25-40% within 12 months. Above 40% is excellent.
In practice
Repeat purchase rate is the business's litmus test: do people buy again? If so, LTV rises and effective CAC falls. If not, there's a product or experience problem.
Common misconception
'A low repeat rate is a marketing problem.' Sometimes the product is inherently one-time (a mattress, a wedding dress). Sometimes the issue is the post-purchase experience. Diagnose before concluding.
How to fix it
Low repeat rate? (1) NPS — are customers satisfied? (2) post-purchase email flow — is there engagement? (3) does the product create a reason to return? (4) a simple loyalty program.
Example
An olive oil store: repeat rate 18%. Customers were satisfied (NPS 68) but forgot to reorder. A subscription plus a 45-day reminder email raised repeat rate to 41%.
Priority
Measure repeat rate at 90 and 180 days. Benchmark: 90 days → 20%+, 180 days → 35%+. Below that, launch an immediate win-back and audit the post-purchase experience.
Related terms
Keep learning. Metrics that touch the same area:
- Churn RateFinanceThe percentage of customers/subscribers who stopped buying or paying in a given period. High churn means every new customer just replaces an old one. Per Harvard research: cutting churn by 5% increases profit by 25-95%.
- Loyalty ProgramMarketingA rewards system for repeat customers: points, discounts, early access, gifts. Increases purchase frequency, AOV, and LTV. Examples: Sephora Beauty Insider, Starbucks Rewards.
- ROI – Return on InvestmentFinanceA general profitability metric: (net profit / investment cost) × 100. Different from ROAS — it includes all expenses.
- AOV – Average Order ValueFinanceTotal revenue divided by number of orders. The biggest lever for increasing revenue without more advertising.
- LTV / CLV – Customer Lifetime ValueFinanceTotal expected profit from a customer over the entire relationship. A healthy LTV:CAC ratio is 3:1.
- Gross MarginFinance(Sale price - COGS) / sale price × 100. The basis for every pricing and advertising decision.
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