When your Shopify store has a large drop-off in its repeat purchase rate, that means your most loyal customers aren't coming back. Which sucks, because of the time and money you've invested in them to acquire and keep them is now gone.
In order to keep those customers around, you need to first diagnose where the problem is. There's a big difference if your drop-off is from the 2nd to the 3rd purchase versus the 10th to the 11th purchase.
Finding your Repeat Purchase Drop-offs
Finding out at which point your repeat purchases drop-off is easy but time consuming so make sure to take your time with the math.
What you need to do is calculate your repeat purchase rate for every step of your repeat orders. That means if you have customers who have placed 5 orders, you'll need to calculate the repeat purchase rate for:
- First -> second order
- Second -> third order
- Third -> fourth order
- Fourth -> fifth order
The actual process to calculate the Repeat Purchase Rates for each step is the same as calculating it for your entire Shopify store but with a few changes.
1. Use the total customers for the first step
Just like in the regular Repeat Purchase Rate calculation You'll want to use the total customers for the first step (First -> second order).
Repeat customers (2+ orders) 8
---------------------------- = ----
Total customers 26
2. Use the prior step's customer count for each new step
After the first step though, you want to use the prior step's customer count. So for example to calculate the Second -> third order repeat purchase rate you'd use the number of customers who placed at least 2 orders:
Placed 3+ orders 2
------------------ = ----
Placed 2+ orders 8
3. Compare the repeat purchase rates for drop-offs
After calculating the repeat purchase rates for every order step, you want to line them up and compare how they change from step to step. A major drop in the percentage rate would be a drop-off. I like to look for drops of 20% or more.
Discovering the drop-offs automatically
Depending on how many customers you have, this calculation could take you anywhere from an hour to a few days. It's easy to do, but time-consuming.
If you're interested in an automatic repeat purchase rate drop-off detection, Repeat Customer Insights now calculates this for you automatically.
Start noticing seasonal spikes in customer behavior
Cohort reports let you detect seasonal spikes as well as long-term retention cycles. Repeat Customer Insights can automatically create cohorts for your Shopify store, going back to your very first order.