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What is repeat purchase rate and how do I measure customer retention in retail?
Repeat purchase rate is the percentage of customers who bought in a period and have bought more than once. Divide customers with two or more orders by total customers in the same group. It indicates whether customers come back after the first sale.
It matters because repeat customers usually cost less to serve than new ones, so retention drives long-term profit.
Commonly misread:
- Measuring over too short a window for products that are naturally bought once a year.
- Mixing old and new customers, so improvement in new cohorts is hidden. Group customers by first-purchase month.
- Counting guest checkouts as different people when the same email or phone buys twice.
Cohort tables, showing each month's new customers and how many return later, give a much clearer picture than one overall percentage.
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