If days pass without customers coming back for a new order, you’re having problems keeping a good purchase frequency. Your chances to win customers back get lower and lower.
But if you keep an eye on purchase frequency (PF) and calculate PF regularly, you’ll keep your departments informed about one of the most important indicators of engagement and customer loyalty.
Did you calculate the purchase frequency, and is it lower than you expected? No worries, we’ll show you several ways to improve purchase frequency.
Key Takeaways
- Understanding Purchase Frequency: Purchase frequency (PF) is the number of times a customer buys within a given period, crucial for tracking engagement and loyalty.
- Why Purchase Frequency Matters: High PF indicates sustainable growth, and higher CLV, and provides insights for better campaigns.
- Calculating Purchase Frequency: Calculate PF using the formula: PF = Number of Orders / Number of Customers.
- Email Marketing: Use customer behavior metrics to send timely, personalized emails.
- Loyalty Programs: Develop loyalty programs that reward customers and incorporate gamification.
- Promotions and Special Offers: Design targeted promotions to encourage repeat purchases.
What is Purchase Frequency?
The purchase frequency (PF) represents the number of times a customer buys within a given period. The higher the purchase frequency, the more opportunities to offer outstanding customer experiences that turn repeat customers into loyal customers.
Some get confused between purchase and repeat purchase rate, which represents the percentage of customers who return to the company for a new purchase.
Purchase frequency is one of the most important performance indicators your company should track because it is
- An indicator of sustainable growth – the higher the frequency value, the better the chances to retain more customers, which is an indicator for sustainable growth;
- One of the ways to increase CLV – there are only two ways to increase profits from existing customers – to convince them to place orders more often or to increase the average order value.
- A source of insights for better campaigns – knowing your purchase frequency values helps you improve the campaigns you design for new and existing customers.
Along with recency and monetary value, purchase frequency plays an essential role in customer behavior segmentation. Yes, we’re talking about RFM segmentation which allows you to segment customers based on their purchase history, and then optimize your efforts based on what you know about customer behavior.
Is Purchase Frequency Different From Repeat Customer Rate?
Purchase Frequency and Repeat Customer Rate are similar metrics, but they’re not to be confused. You already know that purchase frequency is the number of times a customer buys within a certain period.
The Repeat Customer Rate is the % of the total number of customers who made at least two purchases during a specific period. As you can see, the Repeat Customer Rate is conditioned by the number of purchases – while the frequency is loose and unconstrained.
The PF helps you gain insights like “my average customer will buy at least three times/ each quarter”, while the repeat customer rate will reveal information such as “out of all new customers, 23% of them will return for a second purchase”.
Why Is Purchase Frequency Important?
Purchase frequency is crucial in helping you understand your customers
- When They Buy,
- How Often They Buy,
- How Quick They Need To Restock.
For example, if you want to encourage customers to restock their products, you can take two approaches:
The Blindfolded Approach
Some companies are shooting in the dark and they send promotional email after promotional emails – to the point where customers are overwhelmed and annoyed.
The Smart Approach
On the other side of the coin, you will find the data-driven approach: know your customers’ purchase frequency, then anticipate their buying needs by sending timely re-stocking campaigns.
This is just a simplistic example to help you better understand the importance of knowing the purchase frequency for your unique customers. You can also use this metric to understand the customer retention rate or even customer satisfaction.
How To Calculate Purchase Frequency - The Formula
All the information you need to calculate purchase frequency is in your transactional data.
To find how often a customer buys from your brand, you need to divide the number of orders by the number of customers within the period you want to analyze:
Purchase Frequency = Number of Orders / Number of Customers
The purchase frequency formula
You should keep in mind that the purchase frequency is influenced by multiple factors and varies depending on
- The Industry Your Company Is In;
- The Products Or Services That You Sell;
- The Consumption Patterns Existing Around What Your Brand Offers;
- The Company Size By Customer Count.
If you want to compare your business against the average values in your industry or the competitors with the same company size as yours, you can check the Real-Time CLV Benchmark Report (go ahead, it’s 100% free and ungated).
If we analyze the average purchase frequency by shop age, we observe that companies get better at engaging with customers more often as they gain more experience on the market. The better you understand your customers, the more likely to boost purchase frequency.
Analyzing the purchase frequency by industry, we can say that eCommerce customers buy based on their needs. If you want to keep your purchase frequency above average, you need to find ways to generate more repeat purchases outside the peak periods in your industry.
How to Increase Purchase Frequency
1. Use Customer Behavior Metrics to Build Email Marketing Campaigns
Leverage customer behavior data to craft targeted email marketing campaigns. By analyzing metrics such as recency and the average days between transactions, you can determine the optimal times to send sales-oriented emails.
For instance, if a customer typically purchases every 30 days, you might send a reminder email around day 25. Use automated workflows to trigger emails based on these insights, ensuring that your communication is timely and relevant. These campaigns can include personalized product recommendations, special offers, and reminders about items left in the cart.
2. Build and Enroll Customers in a Loyalty Program
Create a robust loyalty program that combines various elements to keep customers engaged. Offer points for purchases, referrals, and social media interactions. Introduce tiers that unlock exclusive benefits as customers reach certain thresholds. For example, a silver tier might offer early access to sales, while a gold tier could provide free shipping on all orders.
Gamify the experience by incorporating challenges and rewards for completing specific actions, such as writing reviews or sharing products on social media. This multifaceted approach not only increases purchase frequency but also boosts the average order value and customer retention.
3. Optimize Your Product Assortment for Repeat Purchases
Even if your main products are not typically purchased frequently, you can still drive repeat business by offering complementary products or accessories. For instance, if you sell electronics, consider stocking related items like cases, chargers, and screen protectors.
Analyze your customers’ purchase history to identify patterns and preferences, then tailor your inventory to meet these needs. Regularly update your product offerings based on customer feedback and market trends to ensure that your store remains relevant and appealing.
4. Offer Access to Subscription-Based Purchases
Subscription models are particularly effective for consumable goods or products with a high turnover rate. For example, beauty products, pet supplies, and groceries are ideal for subscription services.
Offer various subscription plans, such as monthly or quarterly deliveries, and provide incentives like discounts or exclusive products for subscribers. This approach not only increases purchase frequency but also provides a steady revenue stream and enhances customer loyalty.
5. Promotions and Special Offers
Promotions can significantly boost your conversion rate. Design targeted promotions to encourage repeat visits and purchases. Segment your audience based on criteria like purchase history, traffic source, and actions on-site. Offer personalized deals such as discounts for orders, subscription incentives, and shipping discounts.
For instance, provide a “10% off your next purchase” coupon for customers who have items in their cart but are about to leave the site. Additionally, use on-exit pop-ups and small gifts, like samples or downloadable guides, to reduce cart abandonment. Tailor each promotion to specific customer segments to maximize its effectiveness.
6. Free Trials
Offering free trials allows potential customers to experience your products firsthand without any initial cost. For example, a software company might offer a 14-day free trial of their service. During this period, provide exceptional support and resources to help users get the most out of your product.
Follow up with personalized communications that address any issues they may have encountered and highlight the benefits of continuing with a paid subscription. By nurturing leads throughout the trial period, you can convert more users into paying customers.
7. Frequent and Constant Communication
Maintain regular communication with your customers to keep your brand top-of-mind. Send newsletters that include updates on new products, upcoming sales, and company news. Personalize these communications by segmenting your audience based on their purchase history and interests.
For instance, send a special offer to customers who haven’t made a purchase in the last three months, or highlight new arrivals to customers who frequently buy new products. Consistent engagement through emails, social media, and other channels helps build a stronger relationship with your customers and encourages repeat purchases.
8. Gamification
Incorporate gamification elements into your e-commerce site to make shopping more entertaining and engaging. Use mechanics like luck-based games, badges, levels, and community interactions to increase customer engagement. For example, implement a “Wheel of Luck” that offers customers a chance to win discounts or free products with each purchase.
Create badges and levels that customers can earn by completing specific actions, such as making a certain number of purchases or writing reviews. Foster a sense of community by allowing customers to interact with each other through chat features or forums. Gamification not only makes shopping more enjoyable but also encourages repeat visits and purchases.
Different Ways To Approach Gamification
Enjoyer
- Game mechanics: luck, quick games, prizes, boosters;
- Activation: Wheel of luck, Mystery wheel;
Farmer
- Game mechanics: badges, levels, simple tasks;
- Activation: Reviews badges;
Self sicker
- Game mechanics: leader boards, duels;
- Activation: User ratings;
Networker
- Game mechanics: chats, mentoring, community;
- Activation: Reviews badges;
In conclusion, make sure to use the tactics above on your e-commerce website if you want to increase purchase frequency! Happy conversions!
Tina R Case Study
Here’s an example from one of your clients, Tina R, which will demonstrate the power of personalization. The conversion rate increased by 42,68% by simply adding a size filter within a pop-up on site:
Here’s the full case study TinaR.
Wrap up
Purchase frequency is one of the KPIs every company should measure along with customer acquisition cost, customer churn rate, net promoter score, repeat purchase rate, and other retention metrics.
It has a significant impact on customer retention and customer lifetime value. Frequency is also one of the three variables used in RFM analysis, making it one of the key metrics in analyzing customer behavior.
You can learn more about measuring the frequency of purchases and ways to improve customer retention in our CVO Course, where nine instructors guide you through practical advice on generating sustainable growth for your business.
Frequently Asked Questions About Purchase Frequency
Why is purchase frequency important?
Purchase frequency is important for any company because it is an indicator of sustainable growth, represents one of the ways to increase customer lifetime value, and is a source of insights for better campaigns.
What is a good average purchase frequency?
A good average purchase frequency varies depending on the business and industry. Generally, businesses aim to increase purchase frequency to improve customer loyalty and lifetime value. An average purchase frequency of once a month is often considered a good benchmark for businesses, but this can vary depending on factors such as product type, price, and customer behavior.
