How to find the average repeat purchase rate for your market
Retaining new customers is important.
But have you ever wondered what percent of new customers you need to retain, and how many additional purchases they should make, for your retention strategy to be deemed “successful”?
One way to answer this question is to measure how frequently shoppers consume products in your category.
For example, let’s say you run an ecommerce brand that sells cereal.
If 26% of cereal buyers purchase 12 boxes of cereal annually, and 31% of your new customers also buy the same quantity within the same time frame, congratulations… you're outperforming the market, in which case you might consider investing more in your acquisition strategy.
Moreover within any given category, some shoppers will only make a few purchases per year. Knowing the percent of shoppers who fall into this category of buyers (so-called “light buyers”), enables you to anticipate the proportion of your new acquisitions who are unlikely to make more than one purchase, and avoid spending time and money to retain them.
How do you find retention base rates for your market?
By polling a representative sample of shoppers from your market.
It’s something I’ve done several times for clients, and I thought I’d share four ‘to-dos’ if you think conducting such a poll would benefit your brand.
Define & measure your total addressable market
Start with age, gender, income, and any other relevant demographics. For instance, if you target men in the United States aged 35-65 who earn at least $100k annual, use Census.gov or the US Bureau of Labor to determine the percentage of the total population (330 million) that aligns with your target audience (16 million in this case).
Use a reputable vendor to recruit a representative sample
I recommend using CINT. Your sample should reflects your total addressable market in terms of the demographics you select to define it.
Select a sample size
Depending on the demographics you're sampling and the level of precision you seek, select a sample size that balances accuracy with practicality. Remember, a larger sample provides a smaller margin of error.
Design your survey using a reliable platform.
I recommend Alchemer.
Ask about household purchase history, current use, and future purchase intent
In the case of cereal, ask participants if they currently have a box of cereal at home, if they plan to purchase another when it's empty, and to estimate the number of boxes they’ve consumed as a household in the last year.
