How to Increase Repurchase Rate with Magicbean

One of the biggest challenges facing e-commerce companies today is dealing with one-time customers. But a funnel analysis tool could be the key to strengthening your repurchase rate and increasing profits.

Many e-commerce companies spend increasingly large amounts of money acquiring new customers, filling up the top of the funnel (ToFu) with browsers and one-time purchasers. Unfortunately, while the top of the funnel may be full, the repurchase rate for this group is typically quite low and it is often difficult to move customers through the funnel. And even if you have insight into your sales funnel, the data is only as good as the analysis that is performed. This is often where organizations fall short. Having a tool to perform repurchase funnel analysis is crucial to implementing a loyalty strategy and converting your one-time customers to second customers and, eventually, to loyal, repeat buyers who trust your brand and contribute to your bottom line.

Just a 5 percent increase in customer retention can boost overall profits between 25 and 95 percent.  — Bain & Company

This blog post will identify:

1. The benefits of a high repurchase rate
2. How Magicbean's Second Purchase app helps convert first-time customers to second-time customers
3. How Magicbean's Repurchase app drives customer loyalty Repurchase rate is the percentage of customers who have purchased your item or service more than once in a given timeframe.

What are the Benefits of a High Repurchase Rate?

1. Increased Loyalty: A high repurchase rate indicates that you have a faithful customer base that is consistently coming back and purchasing again. In fact, the more often your customers make a purchase, the higher the likelihood is that they'll come back again. A study by RJ Metrics found that 32 percent of customers make a second purchase in their first year as a customer, 53 percent of second-time buyers will make a third purchase, and 64 percent of third-time customers come back to purchase a fourth time. By the eighth purchase, 83 percent of customers are likely to make a ninth purchase. We're sensing a trend!
2. Marketing Optimization: Focusing on repurchase rate with a repurchase funnel analysis tool, like Magicbean, provides insight into your current marketing strategy and allows you to think more strategically about optimizing your marketing strategy. Analyzing where customers are in the funnel and what their purchase habits are can help you ensure that your marketing strategy is optimized to meet customers where they're at and is created with the goal of increasing repurchase rate. You are able to target customers more directly with messaging and products that are more targeted to drive conversion.
3. Cost Savings: It is infinitely more cost effective to retain current customers than it is to acquire new ones. In fact, the cost of acquiring a new customer is five times more expensive than retaining one. Maintaining a high repurchase rate means that the customers you’ve already put the effort (and money) into acquiring are coming back repeatedly, allowing you to focus your resources on other efforts within your e-commerce business.

So, we’ve identified that looking at and monitoring your repurchase rate is important, but how can you make sure that you are focusing on the right group of people in your funnel and driving them to make a repeat purchase? That’s where Magicbean comes in.

How can Magicbean Help?

Magicbean’s suite of apps contains tools to help you increase revenue by driving repeat purchases, allowing you to focus on ToFu customers, and Middle of Funnel (MoFu) customers and assisting you in segmenting those customers, pinpointing their purchase habits, and providing strategies to turn your one-time customers into second-purchase customers, and your repeat customers into loyal customers.

Second Purchase App: This app is ideal for targeting one-time ToFu customers. ToFu customers are those that fall in the widest part of the funnel and, so far, have only purchased one time. This is where you can start looking at what your customers are purchasing, how much they are spending, etc. The Second Purchase app helps you convert one-time shoppers into second-purchase customers, which is the first step toward creating customer loyalty and retaining customers. This app helps you identify:

• The importance of the second purchase: Did you know that customers who have made a second purchase typically contribute to the majority of your company's total revenue? However, on the flip side, the typical conversion rate from a one-time purchase to a second purchase is the lowest conversion rate in the customer's purchase journey. The key to discovering whether your conversion rate is trending in the right direction is to look at the "Conversion Rate to The Next Purchase" chart and see if it creates a "smiley" curve. If so, your conversion rate is on-track.

• The key drivers to second purchase for your customers: This Magicbean app will show you which products, services, categories, prices, etc. are converting first-time buyers into second-time purchasers, highlighting the anticipated conversion rate percentage based on the specifics of their first purchase to help you anticipate your customers' next move.
• Potential number of customers who will convert to second-purchase customers: Magicbean will show you which customers are most likely to place a second order, as well as what the estimated conversion rate is for those customers and the estimated overall revenue gain will be from those specific customers. Once customers are identified, Magicbean recommends products that those one-time customers are most likely to buy next based on their first purchase so that you can market products to them that are most relevant and will increase the chances of a second purchase.

Repurchase App: The Repurchase app is focused on helping you convert repeat customers into loyal customers. These customers are usually MoFu customers, which means they have already purchased more than once. This is where your funnel starts to narrow so it’s crucial that you keep this group of customers engaged so they continue to purchase. The Repurchase app helps you do that by:

• Helping you measure customer loyalty: The Repurchase app will show you metrics related to customer loyalty, like the conversion rate to the next purchase in the funnel, how many customers are at each stage in the funnel, and which customers are at risk of falling out of the repurchase zone, making them unlikely to repurchase. The repurchase conversion funnel is the ideal tool for measuring customer loyalty. The broader the bottom of the funnel, the higher the level of customer loyalty.

• Identifying key drivers to each next purchase: What encourages the next purchase is important to know so that you can continue the efforts that are driving repurchasing. Magicbean’s Repurchase app will show you key drivers based on your organization's actual data. Magicbean analyzes key dimensions to identify drivers to convert customers to the next purchase. For example, the app may suggest brands with the highest conversion rate to help you determine the types of products to push and the type of messaging that resonates with your customers.

• Identifying products that will drive the next purchase: Similar to the Second Purchase app, the Repurchase app will also provide advice for which products to recommend to your repeat customers to drive the next purchase.

Increasing your repurchase rate is critical for your business success. According to Bain & Company, just a 5 percent increase in customer retention can boost overall profits between 25 and 95 percent. It indicates how loyal your customer base is, how effective your marketing efforts are, and how well segmented your sales funnel is. Magicbean is here to help you do more than just look at your funnel, but to analyze the data within it so you can increase your conversion rate with real-time data and analysis, optimize your marketing efforts, and increase customer loyalty.

To learn more about Magicbean's suite of apps and how they drive higher repurchase rates, visit https://magicbean.ai/.