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 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.
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 – 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 that allows you to segment customers based on their purchase history, then optimize your efforts based on what you know about customer behavior.
> Discover the simple guide to RFM segmentation and learn how to identify your most valuable customers based on historical data.
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 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.
Purchase frequency by shop age – as captured in Q4 2021 in the Real-Time CLV Benchmark Report
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.
Purchase frequency by industry – as captured in Q4 2021 in the Real-Time CLV Benchmark Report
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How to increase Purchase Frequency
Measuring purchase frequency helps you keep track of the engagement of your existing customers with your brand.
This way, you can act in time to predict customer behavior and encourage desirable habits in your newly acquired and existing customers. There are several ways you can increase purchase frequency:
Use customer behavior metrics to build email marketing campaigns
Is it hard to make your retention metrics go up? Reengage and reactivate your new and repeat customers with smart email campaigns triggered by the information you’ve already collected about them.
Looking at the recency and the average days between transactions (a.k.a. times between purchases), you will know when it’s the perfect time to send a new sales-oriented email to your customers.
> Learn how to create better onboarding, reactivation, and prevention campaigns via email.
Build and enroll customers in a loyalty program
Keep customers close with more than discounts and quality products. Make them feel important by offering them the option to enroll in your loyalty program.
Create a program that mixes rewards with gamification, VIP benefits, tiers, etc. You will get more powerful in front of aggressive tactics from your competitors. Loyalty programs help you increase the purchase frequency and the average order value.
> See how you can increase your chances of transforming newly acquired customers into repeat customers.
Optimize your product assortment for repeat purchases
Although your main products might imply low purchase frequency, you can still think of some products that can generate repeat orders or complementary products to the one your customers initially purchased.
You can improve frequency within your industry by understanding customers’ motivations and needs. Then, you have to build your offers around what you know customers value, emphasizing how their lives get better using your products and services.
> Get the product optimization framework eCommerce companies are using to improve their product assortment and become more customer-centric.
Offer access to subscription-based purchases
The subscription-based purchases alternative is ideal for FMCG products or seasonal products that get quickly sold out. You can increase your purchase frequency and bring more predictability for your stock needs.
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 frequency of purchase 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
To calculate purchase frequency, you need to divide the number of orders by the number of customers within the period you want to analyze. The result shows how often a customer buys from your brand within the analyzed period.
Purchase frequency is a metric that helps you analyze customer behavior and shows you the number of times a customer buys within a given period. The higher the purchase frequency, the higher the engagement and customer loyalty.
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.