A key performance indicator, Early Repeat Rate calculates the percentage of new customers making a second purchase within a specific period.
The Early Repeat Rate (ERR) is an essential measurement facilitating the understanding of a business's ability to convert first-time buyers into repeat customers within a set timeframe. Typically, ecommerce companies look at this metric during the early stages following a customer's first purchase. For instance, 30, 60, or 90 days are practical periods to evaluate a brand's capacity to entice customers to make that crucial second purchase.
Early Repeat Rate (ERR) = (Number of customers making a second purchase within X days / Total number of new customers) X 100%.
If an ecommerce website gained 1,000 new customers in January, and 200 of those customers made a second purchase within 30 days, the Early Repeat Rate for that period would be (200/1000) x 100%=20%.
The Early Repeat Rate ERR metric carries significant importance as it gives an instant glimpse into the efficacy of a customer retention strategy. It reflects the company's success in cultivating customer loyalty and re-engagement, which invariably boosts profitability. It also helps businesses identify any pitfalls in their customer satisfaction or re-engagement processes.
The Early Repeat Rate ERR reflects numerous factors, including product quality, trust in the brand, customer service quality, and the post-purchase experience. Moreover, the nature of the product or service offered may influence the repurchase timeline. For example, perishable goods or subscription-based services may see a higher ERR than high-value purchases such as electronics.
Improving the Early Repeat Rate ERR begins with initially providing a satisfying purchase experience. It continues with proactive post-purchase communication, personalized email marketing, customer loyalty programs, and special promotions for first-time buyers. A seamless checkout process, excellent customer service, and speedy delivery are also integral to securing that all-important second purchase.
The Early Repeat Rate (ERR) correlates strongly with other key ecommerce metrics such as Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV). A high ERR corresponds to a low CAC and a high CLV, signaling greater profitability for the business. Conversely, a low ERR is suggestive of a higher CAC, lower CLV, and a potential need to adjust the customer retention strategy.