Repeat Purchase Rates Formula

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Monthly Recurring Revenue Formula
MRR is your regular monthly income. It is important to keep this indicator in mind, and also to know the MRR churn rate. We also have an article devoted to calculating churn . It is noteworthy that churn can be negative. In this case, in addition to revenue from new sales, your business receives additional income from existing customers - this is great. To calculate MRR, you need to multiply the number of customers by the average revenue per customer . You can improve this metric using up-sell (increasing tariffs) or cross-sell (additional sales) techniques.

Calculating Monthly Recurring Revenue Using an Example
For example, you have an online swimsuit store. On average, 50 people buy from you per month, the average bill is 1,200 rubles. MRR with this data is 60,000 rubles. To increase it, you can try up-selling: some time after the order is made, offer the user a discount on the next purchase for, for example, two weeks. This offer may well motivate the client, he will make another order, and the average income will increase.

If customers return, it means they are happy with their purchase. The percentage of repeat purchases is one of the best indicators of loyalty. Even if it is 8%, this number of people can increase your annual income by 40%.

How does it work? Let's say you are a B2B company selling website widgets. The frequency of purchases depends on the processes within the client company: someone makes one large purchase at the very beginning and does not return for a long time, and someone orders your services monthly. If you record how many clients return for a purchase and with what frequency, you will be able to make personalized offers, which will significantly affect loyalty and retention.

To find out what proportion of your customers return, divide the number of those who made more than one purchase in a period by the total number of customers in that period . The frequency of calculations depends on the size of the business: you can calculate monthly, quarterly or annually.

Repeat Purchase Rate
Purchase Frequency formula
This metric is related to the previous one, but it shows how often the average customer makes a purchase from your store. The importance is obvious: the more often they buy from you, the higher your profit. To calculate PF, you need to divide the total number of purchases in a period by the number of unique (this is important) customers in the same period .

Purchase Frequency Formula
Increasing the frequency of purchases is one of the direct tasks of list of spain cell phone number marketers. To motivate customers to buy more often, arrange promotions, sales, make personal offers to customers

Customer Lifetime Value Formula
Another popular metric that has many abbreviations: LTV, CLTV (C comes from the word Customer), CLT. This indicator shows how much income a user will bring you over the entire time of your interaction with him. It is important to always keep it in mind: it gives an understanding of how to correctly distribute the marketing budget. In the article , we explained in detail why you need to monitor this metric and how to calculate it.

If LTV is low, you should seriously consider focusing on retention rather than acquisition. As we have already said, the profit from existing customers is usually higher than from new ones. If the LTV level is gradually increasing, you have something to be proud of! The indicator is calculated in different ways, and they differ in the accuracy of the result. The most common formula is the product of the average purchase price, the average number of purchases per month, and the average customer retention time in months .