We talk about repeat purchases a lot on this blog. We talk about it so much that today we’re thrilled to have Nima Patel from Lettuce on our blog to talk about it for us. From the company that makes order management fun, here are two strategies to get more repeat customers.
By now you’ve heard that repeat customers are an incredibly valuable segment for any ecommerce business and should not be ignored. Although that’s easy to understand at a high level, getting your customer base to buy more often isn’t so simple to implement. Monetary and points based rewards programs are standard, but what if we told you today that there were ways to earn deep customer loyalty without having to resort to generic financial incentives?
It’s definitely possible.
Take Zappos for example, one of the biggest online retailers today. Chris Malone, author of The Human Brand, studied Zappos and found that 95% of their sales are conducted online and 75% of their daily sales are from repeat customers. On top of that they’ve never had the need for discounts or rewards based loyalty programs.
Today, we discuss specific tactics you can employ to increase repeat purchases and brand loyalty.
1. Discount Shipping, Not Products
One of the best ways to increase repeat purchases and average order value is to offer discounted shipping for customers who hit a purchase barrier (meet a contingency), according to research from David Bell of the Wharton School of Business. Bell discovered that threshold shipping discounts are viewed more favorably than product specific discounts.
Additional research from the University of Florida shows that contingent free shipping actually encourages consumers to buy more when they come back and increases your average order value:
This study found that consumers lean towards writing off the shipping fee anytime they’re confronted with a threshold and thus purchase more per visit.
Stores are catching on. Take a look at Bonobos free shipping policy:
The $125 threshold and free shipping looks like a pretty good offer, especially considering the average price of their products. Adding two to three products to your cart will get you past that barrier – not bad!
Other companies have been able to form entire business models on fast, free shipping. Take Pure Formulas for example, 60-65% of their sales come from repeat buyers and they have a conversion rate of 10.75%.
2. Treat Customers Like Humans
Emails that have personalized content improve CTR’s by 14% and conversion rates by 11%. Although personalization seems like a no brainer, it can be tough to know where to get started. There are two key ways you can use data to create a more human experience for your buyers.
Look for clusters in data
Not all customers are created equal. This means there are certain metrics that you shouldn’t view at the average, instead you want to look for clusters. For example, when looking at the number of days it takes customers to make a repeat purchase, it’s imperative to segment customers into clusters.
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Let’s say for example you have two segments of repeat buyers. One segment tends to make a repeat purchase 30 days after the first purchase and the second waits 60 days. This means if you look at the average repeat purchase date your data will tell you most people on average tend to come back and buy 45 days after the first purchase. So your email schedule would look something like this:
Ideally want to send an email with new releases, content, etc. to get back on their radar immediately before they intend to purchase. Sending an email 15 days after your first segment intended to buy and well before your second segment plans on buying isn’t that useful.
Instead if you look for signals in your data and cluster people around key repeat purchase points you can segment your emails like this:
Revolve Clothing employed this strategy and they were able to bring 33% of their one-time buyers back for a repeat purchase. Impressive!
The goal should be to target your buyers when they’re in the mindset to buy or close to it.
Leverage customer-specific data
Some of the best ecommerce stores do an impressive job of taking basic customer data and turning it into an opportunity to have a conversation. Take Rent the Runway for example:
Their emails take birthday dates, dress size, body type and prior brands rented to personalize emails that go out to women after they rent their first dress.
According to the Aberdeen Group, companies that are leading the pack and heavily customizing emails to their customers are seeing incredible results:
- 51% increase in open rates
- 42% increase in click-throughs
- 26% increase in conversion rate
They’re seeing these results because they’re segmenting their emails by demographic, customer behavior, purchase history, and more. Then, within the emails, they are addressing customers by name and offering them unique offers based on their profile.
This requires more implementation at the back-end to segment the data and push it to your email automation tool, but there’s no denying the immense potential to dramatically lift repeat purchases and long term customer value.
What strategies have you tested and found to be effective for increasing repeat purchases? We want to hear all about them in the comments!