The impact Repeat Purchase Rate has on your customer’s lifetime value

Customer lifetime value (CLTV or LTV) is a good metric to watch.

Unlike the average order value, CLTV takes into account your customers’ repeat orders.

Usually when your store’s overall CLTV goes up, good things are happening.

In my experience with repeat customer funnels, there’s another great metric: repeat purchase rate (RPR).

Repeat purchase rate is the rate at which customers come back and buy again.

Think of it as your repeat customer’s conversion rate.

The great thing about your repeat purchase rate is that it compounds.

If 50% of your customers buy a second time, then 50% of them will buy a third, and 50% of them will buy a fourth time, etc., etc.

This compounding makes improvements in your repeat purchase rate have a dramatic effect on your revenue.

If there’s a high chance of any given customer buying again then that next order counts towards their CLTV.

Store-wide repeat purchase rate optimizations will commonly increase your CLTV across the board.

That’s why repeat purchase rate is one of the core metrics Repeat Customer Insights tracks. Not only store-wide but also for every step in your repeat purchases. From the first order to the last.

Eric Davis

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