Take a look at this graph:
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I saw this on my way back from Europe earlier this week, the original poster dubbed it:
The “Mona Lisa” of eCommerce.
Why?
Because it shows the power of repeat purchasers in the long term.
And why everyone in eCommerce should focus on the age old principle of selling MORE to those who have already bought from you.
This graph is a showcase of how a brand can EXPAND their margins by staying patient and focusing on repeat orders.
Here’s the caption from the tweet (highly recommend you take note of this)
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The perfect picture of how to create predictable profitable growth.
Hold new customer acquisition constant (or slightly grow it) and stack repeat cohorts. This is how margin expands as revenue grows. Most brands offset this margin expansion by throttling into unprofitable new customer acquisition. Don’t do that. Hold the line on profitability and watch the returns compound.
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You read that right…
With a tidy repeat purchaser percentage, you can literally expand your margins as you grow revenue.
It all comes back to having products that people love to continuously buy.
Products that solve real problems are products that people will buy forever.
And if you’re one of the lucky ones who have these on offer?
You should be doing everything in your power to ensure people are buying again.
Brian Kurtz spoke about this in Overdeliver.
Once he realised that he was in the game of renewals, he was far more aggressive with marketing for new customers – because he knew that once he got them through door…
They would be back for more.
Getting his renewal rate (repeat buyers) as high as possible allowed him to get MORE customers than his competitors at an UPFRONT LOSS because he knew these customers would be profitable in the long run.
Hectic stuff.
But it goes to show…
Lifetime value is king.
Make sure you keep a close eye on it with your business.
For a marketing team who can help you turn one time buyers into lifetime buyers, click the link below:
Lachlan