E-commerce repurchase rate analysis and improvement strategies!

New users and repeat purchases are the two main sources of e-commerce user growth. However, in a market context where traffic dividends are almost exhausted, the e-commerce traffic structure has stabilized, and the cost of acquiring new users continues to rise, increasing the lifetime value of users by improving repeat purchases is both an effective way to maintain the basic base of users and a prerequisite for ensuring the effectiveness of acquiring new users (cac≤ltv).

1. Definition and caliber of repurchase rate

1. Divide by time

• Absolute time repurchase rate: the proportion of users in the previous cycle who purchase in the next cycle. For example, if there are 1 million customers in August and ab in total, and 500,000 customers are repurchased in September, then the repurchase rate of August users in the next month is 50%. When analyzing, users in the previous cycle can be stratified according to their status when placing an order, such as new customers in August, old customers in August, etc. The stratification dimension should be aligned with the population dimension with differentiated operation strategies or obvious attribute differences in the actual operation.
• Relative time repurchase rate: the proportion of users who place orders at the same time in a group who will place orders again in the future. For example, if there are 1 million ab orders in August, and they place 200,000 ab orders again within 7 days after placing an order, then the 7-day repurchase rate of users in August is 20%. The stratification idea is the same as above.

Absolute time and relative time repurchase rates each have their own usage scenarios. The former is suitable for continuous mining of the life value of existing users. Since the cost and contribution value of getting an old customer to repurchase are often greater than acquiring a new customer, when the marginal cac of old customer repurchase ≤ the cac of new customer, it is worthwhile for us to continue to retain old customers by repurchasing . The latter is suitable for horizontal and vertical evaluation of the quality of new users added through different channels, and can evaluate and optimize strategies in real time based on the repurchase rate and trend of currently recalled users.

2. By user

• Regular customer repurchase rate: the repurchase rate of users who were regular customers of the platform before the statistical period began in the next N days or the next period.
• New customer repurchase rate: The repurchase rate of users whose first order occurred within the statistical period in the next N days or the next period
• Layered repurchase rate: Perform personalized user stratification based on business needs and monitor the repurchase rate of users in each stratification

2. Main factors affecting repurchase rate

1. Indicator breakdown

Repurchase rate = revisit rate × conversion rate

2. Influencing factors

1) Repeat visit rate

• User quality: The higher the quality of the ordering users, the higher their repurchase rate. The quality can be measured by indicators and source channels such as the distribution of new and old customers, the number of orders, the distribution of visit activity, and the distribution of the number of purchased categories.
• Seasonality: Holidays, weekends, industry promotions, related hot spots, off-season and peak seasons may all lead to an increase in the trend of return visits. When comparing the return visit rate on a month-on-month basis, it is necessary to consider whether this has an impact.
• Marketing recall: The marketing recall effect. When conducting a specific analysis, it is necessary to make assumptions and verify the relationship between marketing strategy, strategy effect, corresponding population revisit rate, and overall market revisit rate.
• How to promote return visits: Pay attention to the iteration and operation effects of return visit tools such as on-site sign-in and daily hot items or mental fields

2) Conversion rate

• User quality, seasonality and other factors will also affect conversions, and the analysis method is the same as above.
• Goods and marketplace: The adjustment of goods and marketplaces within the site will directly affect the conversion rate, but the adjustment strategy of the marketplaces and categories with a large proportion of users should be focused on first. The indicators to be paid attention to include hot items, average order value, subsidy rate, price advantage, etc.
• Conversion promotion methods: focus on the adjustment of promotion methods, UG methods, KOC operations and their corresponding effects

After completing the above analysis, it is necessary to pay attention to the contribution of sub-dimension data changes to overall data changes to avoid drawing incorrect causal relationships. If the dimensions we can analyze superficially cannot explain the final result, we need to analyze it more deeply.

3. Strategies to increase repurchase rate

Since repurchase rate = repeat visit rate × return visit conversion rate, the improvement of repurchase rate must focus on both return visit improvement and conversion improvement.

1. Return visit improvement strategy

The user's return visit mentality includes two levels: one is that there is content on the site that attracts users and they actively return to the site; the other is that the platform marketing or content shared by friends hits the user's interest and they are recalled. The former is the basic base of revisits, with low recall cost and high contribution value, and should be operated as a priority; the latter is the incremental revisit space, with high marginal incremental cost and high quality uncertainty of recalled users, and it is necessary to monitor the leverage relationship between marginal revisit cost and marginal revisit incremental benefit during operation.

First, we look at what content can cultivate users' return mindsets and attract users to return. The three elements of e-commerce are people, goods, and place. The value of operation is to reasonably create and combine the elements of "goods" and "place" according to the needs of "people". Among them, goods are the core of user value demand and the basic element of place. Place is the presentation logic and expression form that stimulates and satisfies user needs in an efficient manner. Here are some places and tools that can help cultivate users’ return visit mentality:

1) Daily surprises and must-visit places

According to the characteristics of the product category, we build a platform that "entices" users to visit every day, such as daily new products, daily low prices, and daily flash sales.

2) Check-in tool

The basic logic of signing in is to attract users to visit the product at a regular interval, and to indicate that they have used the product or function by clicking a button or visiting a page.

When users complete the check-in, they will be given rewards to reinforce user behavior, thereby increasing user stickiness. In actual operation, the sign-in gameplay can be packaged into various styles according to the product characteristics, including simple signing and clocking in, as well as gamified interactive gameplay.

3) Marketing recall

Marketing recall is an effective means to attract existing users to return. General contact channels include push, SMS, subscription messages, official accounts, etc. The marketing recall strategy is introduced in detail in my previous article "A Quick Start to Precision Marketing in E-commerce", so I will not repeat it here.

2. Conversion rate improvement strategy

The key to improving conversion rate is to understand user needs and the pain points and itch points in the process of satisfying user needs. In the operation process, it is implemented as product optimization and a series of promotional methods around products. The former is mainly the function of the business category side, and this article mainly focuses on the latter.

There are countless promotional methods, and the core is to make users feel the surprising prices and benefits through exclusive discount methods, generate the desire to buy, and thus increase the frequency of purchases or the amount of consumption.

1) Coupons

Coupons are a common growth tool that does not affect the price of the product itself, but instead achieves price reduction through additional discounts. It can be used to achieve different purposes by setting coupon thresholds, coupon denominations, coupon validity periods, and the target group of coupons.

We can achieve different operational purposes by setting different voucher types and collection methods.

a. Collection method

• Direct recharge coupons : The system directly recharges coupons to user accounts. The advantage is that it effectively reduces the user's coupon collection funnel. It is suitable for user groups with low return visit rates and large active coupon collection funnels. After direct recharge, this can be used as a gimmick to promote return visits and conversions. The disadvantage is that non-users actively collect coupons, so the perception is poor.
• Click to receive coupons : In-site advertisements are used to remind users to actively click to receive coupons. The advantage is that it can enhance users’ awareness of receiving coupons. The disadvantage is that it relies on users to actively click to receive coupons, which is easy to be ignored. Too frequent reminders will disturb users.
• Purchase coupons with gifts : Users receive designated coupons after purchasing designated products. The purpose is to lock in the user's next purchase and promote the user's current purchase. However, the purchase coupons with gifts must be differentiated from the products in this order to avoid user order cancellations.
• Task coupons : Users can obtain coupons after completing designated tasks. The purpose is to attract users to complete designated tasks through coupons, thereby generating HVA (high value action).
• Fission coupons : When users share designated content in their social circles, the sharer can obtain coupons or inflated amount coupons, and the person being shared also has the opportunity to obtain coupons of a certain amount, thereby promoting users to share products or activities on the platform.
• Cross-industry coupons : By cooperating with cross-industry platforms, coupons are used as a means to attract users to become customers of this platform.

b. Scope of use

According to the scope of application of coupons, they can be divided into full-site coupons, category coupons, brand coupons, and product coupons. The respective usage scenarios are as follows:

• Sitewide coupons : mainly coupons initiated by the platform to promote sales growth or user growth of the entire site. Sales growth coupons mainly assess the incremental ROI of the entire site, while user growth coupons mainly assess the number of incremental customers and per capita improvement costs.
• Category coupons : mostly used in category promotions or cross-category guidance, mainly assessing the category sales incremental ROI or the category's incremental customer numbers and per capita cost improvement.
• Brand vouchers/merchandise vouchers : mostly initiated by suppliers with the aim of promoting brand sales growth or maintaining the health of brand users.

In short, coupons are a traditional but timeless effective growth tool, but excessive use can also lead to user dependence. We should distribute the right coupons to the right people in the right scenarios at the right time.

2) Save money with monthly pass

The money-saving monthly card is a lightweight paid benefit. Users pay to purchase related benefits whose expected benefits are greater than the paid amount. Currently, the money-saving monthly card benefits of major e-commerce companies are all coupon packages of varying quantities, but the rules for using them are different. The popularity of money-saving monthly cards is due to the fact that this method can increase user stickiness. Its core is to use the user's loss aversion psychology after payment to anchor their subsequent purchasing behavior.

a. Comparison of various e-commerce monthly card methods to save money

b. Money-saving monthly card operation strategies of various e-commerce companies

Jingdong-Money Saving Monthly Card:

Pinduoduo-Money-Saving Monthly Card:

Taobao-Money-Saving Monthly Card:

3) Shopping allowance

Shopping allowances are vouchers launched by Tmall during events, which can be used by consumers to directly deduct a certain amount of cash based on a certain discount threshold when shopping. Shopping allowances and coupons can be stacked, so they can be used as additional superpositions on the basis of existing discounts for merchants and platforms to achieve multiple operational purposes. Moreover, shopping allowances can be differentiated from coupons in terms of cognition, thereby enhancing users’ perception of discounts (for the same discount amount, multiple discounts > single discount).

"Allowance" originally refers to a form of wage subsidy given to workers. Users' psychological suggestion of allowance is that it is an extra asset, so it is very helpful to give users the perception of extra benefits. It is for this reason that e-commerce companies have turned shopping allowances into an asset that can be used as cash on their platforms.

4) Instant discount

The core of instant discount is direct reduction of single products. Other products with similar functions include single product coupons and subsidized prices, but instant discount has its own characteristics.

First of all, instant discounts can choose the right people and give the right amount at the right time, but single product coupons are all the same in the industry or in the minds of users, and there is insufficient room for refined operations.

Secondly, the instant discount gives users the impression that a certain amount of money is deducted from the original price of the product, rather than directly changing the sales price of the product with a subsidized price. The latter can only be used for new users, paying users, and other users with clear identity differences under the restrictions of big data price discrimination, while instant discounts have greater flexibility.

This article introduces the ideas of drill-down analysis of repurchase rate and the strategies and tools for improving repurchase rate from an operational perspective. Improving the repurchase rate is not only a key function of user operation, but also a core indicator of the entire platform. It requires the coordinated efforts of various modules such as business, operations, channels, technology, and customer service.

Author: Yang Xiaoguo

Source: Yang Xiaoguo