Purchase Frequency, Rebuy Rates, and Lifetime Value

Here's what happens when customers shop infrequently.

• Annual Rebuy Rate = 28%.
• Annual Purchases per Buyer = 1.4.
• Lifetime Value = Low.

Here's what happens when customers shop frequently.

• Annual Rebuy Rate = 75%.
• Annual Purchases per Buyer = 5.9.
• Lifetime Value = High.

Which company is most dependent upon new customers?

• Low Rebuy Rate, Low Annual Purchase Frequency.

Which company is penalized most in lifetime value?

• Low Rebuy Rate, Low Annual Purchase Frequency.

Here's what is fascinating in my work. 

• Companies who most desperately need low-cost / no-cost customer acquisition programs are those with low annual repurchase rates and low annual purchase frequency. They have no choice but to build their entire business model off of awareness that leads to new customers.
• Companies who are most effective at developing low-cost / no-cost customer acquisition programs are those with high annual repurchase rates and high annual purchase frequency. The companies who benefit the most from plump lifetime value totals are the very companies who put programs in place to acquire customers at low-cost or no-cost.

The majority of readers manage a business with low annual repurchase rates and low annual purchases per buyer. These are the businesses that cannot afford to pay money for new customers. And yet, these are the businesses who enjoy paying for new customers.