Repeat Sales Report Tool
To analyze repeat sales, you need a specialized report that allows you to distinguish between customers who bought once and customers who bought two or more times.
To understand the context of the article, let's clarify the logic of the report.
The report automatically segments the customer base according to two criteria: the frequency of purchases (how many purchases were made in total) and the recency of purchases. This is similar to FRM analysis, but without the monetary component (example Figure 1).
Figure 1. Repeat sales report
The report generates customers by segment with unique names corresponding to the frequency and age of purchases. For example, if a customer purchased an item recently, it is "active", and bought once, then it falls into the "Active New" segment. And if the product was bought a long time ago, for example, 8 months ago, the client turns into “asleep” and we will find him in the “New Asleep” segment.
This segmentation allows you to calculate and analyze the parameters important for repeat sales:
- the proportion of customers who bought only once;
- the share of prospective customers (who bought 2 times);
- share of regular customers.
An analysis of this data allows us to conclude how satisfied customers are with the company's services and are willing to buy again, whether the company can rely on a permanent customer base, or it is completely dependent on the flow of new customers.
Recommended values for repeat sales figures are known :
- for young companies the growth rate of regular customers is 10-15% per year;
- for companies that are 2-3 years old, the desired share of regular customers is 25-30%;
- according to global statistics, the share of repeat sales for mature companies (5-7 years) should be 40-60% of total revenue.
Deviations from these figures downward are a clear "point of growth" for the client's business and an opportunity for partners to sell additional services!
Case of the company "Electrical equipment"
Let's consider the first example - the company "Electroequipment", which is engaged in the wholesale trade of industrial electrical equipment. The “Repeat sales” report provides the following picture:
Let's calculate the repeat sales rates:
- 7% or 225 regular customers in 3 years;
- 2405 customers who bought only once in 3 years;
- 801 customers bought only 2 times.
Note that there is a great potential for repeated sales in the company "Electrooborudovanie"!
1,518 buyers bought only once! For various reasons, these customers did not come back to you after the first purchase.
Also, of all clients, only 121 (4%) are active and permanent, providing a stable income for the company.
In accordance with international practices, it is worth targeting 25-30% of regular customers. Clearly you need to work on “Repeat Sales”: improve the quality of customer service so that they want to buy from you again, engage and retain customers.
This is a lot of work, and many have doubts about whether it is worth spending time and effort organizing work with a permanent client base. Isn't it better to work with new clients every time. Does repeat sales make economic sense? Will the company earn more by organizing this process?
The answer to this question is unequivocally YES! You can definitely earn more!
Check out the cost-benefit assessment. Using this logic, you will be able to calculate the economics for your company.
Let's clarify the input from the report:
- Number of buyers. The data is shown in the first figure.
- Number of purchases. New customers make 1 purchase, promising ones - 2-3, regular ones - 4 or more.
- Let's add one more parameter - “average bill”. This parameter is needed to calculate the planned revenue. In our example, the average check is 25,000 rubles.
Our task is to calculate and compare 2 options of possible revenue for the company with the current level of sales (7%) and the possible revenue from repeat sales, if the company had the share of repeat sales at the minimum level (25%).
Let's compare the revenue figures for our company Electrical Equipment and Electrical Equipment - Best Practices. With the current size of the client base, the share of regular customers is 25% - this is 432 clients.
Let's calculate and compare the revenue for these two options.
We see a dramatic difference in revenue for a company focused primarily on new customers and re-selling.
To summarize: for any business it is important to strive to increase the base of reliable loyal customers (regular customers), to attract and retain customers. It is cost effective.
Companies seeking to organize repeat sales work no more than others, but they feel confident, have good profits and are very stable! Good repeat sales !