The Impact of Returns on your Repeat Purchase Rate

July 26, 2022
| by Rebecca Fox

Product returns have a direct impact on your repeat purchase rate.

While it may seem counterintuitive that customers who want to return items would be likely to buy from you again, here’s what’s happening: providing an easy and reliable returns process shows your customers what to expect if they need to make a return again in the future. This makes your customers more confident to buy from you again.

Here are some tips for using your returns process to improve your repeat purchase rate.

What is the Repeat Purchase Rate?

Your repeat purchase rate (also referred to as repeat customer rate) is the percentage of your customers that have bought from you more than once. 

Tracking your repeat purchase rate helps you determine how to improve your customer experience and increase the likelihood of customers buying from you again.

How do you calculate your repeat purchase rate?

Divide the number of returning customers by the total number of customers, then multiply by 100 to get your percentage.

For example, say you have a total of 250 customers, of whom 36 have bought from you more than once. In this case, your repeat purchase rate would be 14.4%: 36 / 250 x 100 = 14.4.

What’s a good repeat purchase rate?

Every industry has different levels of what’s considered a “good” repeat purchase rate, depending on your products and which customer segments you’re targeting. That being said, a reasonable repeat purchase rate to aim for is 20-40%.

Repeat Customers are More Profitable

Getting your customers to come back and buy from your online store again is a key factor in long-term profitability. Loyal customers spend more and refer more people, making them way more profitable than one-time shoppers. 

When eCommerce stores focus on building customer retention, they’ll ultimately be more profitable than stores that focus only on transactional metrics such as number of site visitors, total number of shoppers, etc. 

So why exactly are repeat customers more profitable?

  • Repeat customers are easier to sell to. Customers become increasingly more likely to buy from you again with each purchase they make. 
  • Repeat customers spend more. They buy more frequently and spend more on each purchase. 
  • Repeat customers refer more people. Word of mouth is the most effective and economical way to bring in more customers.

How to Use Returns to Boost Your Repeat Purchase Rate

Many eCommerce merchants view refunds and exchanges as costly and negative, when in fact, having your customers make returns can actually be better for your bottom line. 

A positive return experience can increase your customers’ confidence in purchasing from your store again. In short, the easier you make your online returns process, the more likely customers are to come back and buy again.

Let’s break down some key strategies for using returns to boost your repeat purchase rate.

Create a Customer-Friendly Return Policy

Your return policy is what helps customers decide whether to buy from your eCommerce store. In fact, over 60% of customers look at the return policy even before they make a purchase.

When customers read through your return policy, they are looking to see how easy it will be for them to request a return, and based on that, they’ll decide if it’s worth buying from your store.

Having a flexible, customer-friendly policy makes customers more likely to ask for returns, leading to more repeat customers.

Make it Easy to Return Items

Your customers want a fast and reliable returns experience. 92% of customers say they’ll buy from the same store again if returns are easy. 

Help your customers help themselves. The less they have to jump through hoops to initiate a return, the better.

With the right technology in place, you can automate many parts of the returns process. Using an automated returns system you can provide a self-service return portal where customers can easily request to make a return, saving time and energy and making returns easy.

A returns management system also helps you track and manage all your return requests in one place, decreasing the likelihood of return requests getting lost or forgotten along the way.

Automating your eCommerce returns helps you reduce the amount of time your team spends processing returns and increase the number of customers who will buy from you again.

Incentivize Exchanges Over Refunds

Exchanges are by far the best type of return option for customer retention. Exchanges keep the customer relationship going.

When customers choose an exchange over a refund, your store retains revenue, and you also build customer loyalty by putting the right product in the customers’ hands.

Ways to incentivize exchanges over refunds:

  • Offer free return shipping for exchanges
  • Extend the exchange return window
  • Add bonus credit for exchanges
  • Make exchanges easy

Prioritize turning as many of your refunds into exchanges as possible. You’ll keep your customers happy, retain revenue, and build customer loyalty. 

Increase Your Repeat Purchase Rate With Returns

Increasing your eCommerce store’s profitability starts with keeping the customers you already have. Repeat customers spend more at your store, and bring in new customers – making them a powerful tool. 

Streamlining your return and exchange process keeps customers coming back and buying from you again and again.

The more you know about your repeat purchase rate and strategies for increasing it, the faster your store can grow organically. Implement these strategies and watch your customers come back for more.

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