What Are Repeat Sales?

Repeat sales are purchases that customers make to replace the same items or services that they had bought and consumed previously. Repeat sales are an example of brand loyalty. If a customer is happy with a particular brand of shampoo, for example, he or she may purchase the same product—or another related product of the same brand—when it's time to replace it. A repeat sale may also be called a "replacement sale" or "repurchase."

Understanding Repeat Sales

Repeat sales are similar to repeat purchases and are related to repeat customers. Repeat purchases may involve purchasing the same item from a different seller. Repeat customers are those who frequent the same seller and/or make repeat purchases of the same or brand-related items, creating a "halo effect."

A key tenet for a seller in garnering repeat sales is to take better care of customers than does the competition. As such, learning how to secure repeat sales and repeat purchases is a critical aspect of a salesperson's training. Making repeat sales is a significant achievement, either as an individual salesperson relying on commissions and incentives or as a corporation looking to increase profits.

Many businesses focus the bulk of their time and budget on acquiring new customers. Studies show that—because of marketing and advertising expenses—it costs companies more money to attract new customers than to bring back existing customers. So, if a business needs to increase revenue, it might be wise to look first at ways it could cater to it's existing customers.

When marketing to a prospective customer, you have only a 13% chance of persuading them to make a purchase; with repeat customers, however, there's a 60%-to-70% chance that they will buy.

How Repeat Customers Equal Repeat Sales

Concentrating on customer retention and encouraging repeat customers creates long-lasting, profitable relationships, which in turn can boost sales. Here's why:

  • Repeat customers spend more money. Research shows that, over time, return customers tend to spend about 300% more than one-time buyers. Return customers would also likely trust your recommendations enough to buy your more expensive products or services.
  • It's easier to sell to repeat customers. A repeat customer is a known entity; you already have an idea of what they like about your product or service. Why waste your limited time and resources on potential customers who end up never buying anything?
  • New customers cost you more. It costs five times more to acquire a new customer than it does to keep a current customer; bringing that new customer to the spending level of your current customers costs 16 times more.
  • Repeat customers can promote your business. Loyal customers make great brand ambassadors, so can save on marketing costs; they also refer 50% percent more people than do one-time buyers.
  • Customer retention can help build a solid business. By increasing customer retention by just 5%, a company’s profitability will increase by an average of 75%. Investing in repeat business costs you less and makes you more.

    Key Takeaways

    • Repeat sales come from customers repurchasing products and services that they like.
    • Repeat sales are more cost-effective for companies than using advertising and marketing because they cost less.
    • This is especially true for e-commerce companies, as 50% of their business comes from repeat sales.

    Special Considerations

    Measuring Repeat Sales

    A business or individual can measure repeat sales and repeat purchases by calculating a repeat purchase rate, which is the percentage of a company or brand's customers who return to make another purchase. The repeat purchase rare may also be called a "reorder rate," a "repeat-customer rate," or a "customer-retention rate." The goal is to gain increasingly higher rates.

    Repeat Sales and e-Commerce

    Each industry, retailer, or brand has a standard repeat sales or purchase rate. A good benchmark for a business is to have about one-quarter of customers return to repeat a sale. For e-commerce companies, however, repeat sales account for as much as 50% of total sales. It is challenging for Internet companies to earn these customers, as shoppers can do their own research and go anywhere online to get what they want.

    However, there are a number of strategies that e-commerce companies may employ to help ensure that new customers become repeat customers:

    • Create a loyalty or rewards program that rewards customers for repeat purchases
    • Use testimonials from repeat customers to get new customers
    • Engage repeat customers as brand advocates by having them interact with/ answer questions from consumers via any medium—social media platform, company website, email, telephone, text, phone app
    • Enlist repeat customers to provide referrals
    • Offer discounts for previously purchased items
    • Inform customers about new products or features, or new uses for products that they've purchased in the past