Successful to unsuccessful tenders

Category: Sales.

The Purchase Frequency metric helps the sales manager see the number of times the same user makes a purchase within a certain period – in short, the number of times one of your loyal customers, for example, buy a service or a product from your business in a set period.

This metric mainly contributes to the profitability of your business – the other option that can help you grow your profitability is trying to get customers to buy more products/ services during each visit (matter analyzed by the Average Order Value metric).

The Basics of Purchase Frequency

If you want to grow your profitability, it’s better to know how you are currently doing in terms of purchases. For this, you should investigate the Repeat Purchase Rate – as this shows you how many of your customers have returned to your shop to buy another one of your products/ services.

Repeat Purchase Ratio Formula

The Repeat Purchase Rate is calculated by dividing the number of customers that bought more than once in your shop by the total number of customers – this metric is usually calculated for a period of one year.
Naturally, you want to have a high Repeat Purchase Rate, as every subsequent purchase increases the Average Order Value, as well as your total revenue.

Purchase Frequency Formula

To come up with the Purchase Frequency of your business, you just have to divide the number of orders by the number of unique customers – easy, right?

The Purchase Frequency metric is important because it helps you shape your marketing strategies to your customers’ behavior and preferences. You might want to try and advertise a product that is not being sold many times, but you would rather go and advertise one that’s been bought multiple times, as you know that a decent number of customers has liked it.

Time Between Purchases

Another way to increase your Purchase Frequency and, subsequently, your business’ profitability, is to investigate the time between purchases. Let’s say that, for example, the average time between purchases if of 8 weeks – meaning that a decent number of customers usually take two months before returning to make a purchase from your store.

With the help of this information, you can set up marketing campaigns and e-mails exactly for those customers – showing them that you care for your loyal customers. The insight provided by this metric also gives you the chance to increase the Retention metrics and the Repeat Purchase Rate of your business.

The Bottom Line

It’s not that difficult to maintain and increase your purchase frequency. First, you don’t have to rely on a single metric when trying to increase the profitability of your business – there are dozens of metrics that must be considered if you want to satisfy your customer and yourself.

In the end, it’s not all about trying to sell your product/ service to as many people as you can – it’s about coming up with a brand and a strategy that will satisfy customers and make the return to your store.

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