December 26, 2021

Rebuy Rates

Almost twenty years ago I wrote a book that had nearly two-hundred pages of text talking about rebuy (repurchase) rates.

Rebuy rates are so darn important - and they are so darn easy to calculate.

Take every customer who bought during 2020 (100), then calculate the percentage who bought again in 2021 (27), then divide 2021 repurchasers by your 2020 inventory of customers (100) and you have your rebuy rate (27/100 = 27%).

Why do rebuy rates matter?

Rebuy rates matter because they indicate the type of business you manage. The rates are not reflective of success or failure (unless compared to prior years). The rates simply tell you what your marketing purpose is.

When overall rebuy rates are < 40%, your purpose as a marketer is to find as many new customers as possible at the lowest possible cost.

When overall rebuy rates are > 60%, your purpose as a marketer is to find as many ways as possible to increase the number of incremental purchases loyal customers place.

The biggest mistakes I see are when a company with a 27% rebuy rate tries to act like they have a 72% rebuy rate. The company invests all sorts of money on discounts and bribes to encourage customers to become "loyal". This tactic (push loyalty efforts to customers unlikely to repurchase) just doesn't work. Never has. Those who say it "works" are looking at incremental gains in sales/profit, which happen ... but the work the marketer performs does not fundamentally change the sales trajectory of the brand.

About 80% of my client base possess twelve-month buyers with rebuy rates < 40%.

This means 80% of my client base needs to be obsessed with customer acquisition.

Very few companies are obsessed with customer acquisition.

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