What is a repeat customer?

A repeat customer, or repeat buyer, is a customer who makes at least two purchases with the same company. Over time, as they continue to repeat business with you, these individuals can become your most loyal customers, with higher customer lifetime value and levels of customer satisfaction. As the cost of acquiring new customers can be five to ten times greater than that of retaining existing customers, identifying repeat customers and understanding their needs and preferences is a powerful strategy for any ecommerce business. 

Subscribers are a particularly valuable type of returning customer, as their purchases recur on a set cadence. However, subscribers and repeat customers are not synonymous, as a repeat customer does not always sign up for a subscription to continue their purchasing behavior.

Strategies for increasing repeat customer rate

There are many strategies businesses can use to encourage customers to make repeat purchases. Paying attention to customer feedback is a crucial one, as is monitoring trends in customer shopping behavior. By identifying patterns in customer data, behavior, and feedback, businesses can identify areas for improvement in the customer experience—not only helping increase customer retention rate, but also aiding in new customer acquisition. Customer loyalty programs can be another effective way to encourage repeat customers to continue to purchase. Perks like free shipping, discounts, or exclusive access to products and early releases can all be incorporated into a loyalty program to incentivize a repeat purchase.

What is subscription fatigue?

Subscription fatigue refers to a potential decrease in consumer interest around subscription services over time as the number of available subscription offerings increases. With the massive growth of the subscription economy in recent years, more and more businesses have flocked to the subscription business model. Today, many consumers hold more subscriptions than ever before, for everything from their utility bills to subscription streaming services (e.g. subscription video services like Netflix, HBO Max, and Amazon Prime Video) to curated subscription boxes, meal kits, and recurring deliveries of essential household goods. 

The idea behind subscription fatigue is that such a crowded subscription landscape could lead to greater hesitancy among consumers to sign up for yet another recurring offering. In theory,  subscription fatigue could increase the likelihood that customers cancel subscriptions outright, leading to higher churn rates and decreased customer lifetime value, average order value, and customer satisfaction.

How to mitigate potential fatigue surrounding the subscription business model 

With so many subscriptions on the market today, one customer often holds subscriptions for multiple services. It’s important for subscription businesses to remember that they aren’t just competing with other brands in their vertical—they’re competing with all recurring offerings. Therefore, to stand apart from the competition and reduce the likelihood of potential subscription fatigue, a subscription business should aim to make their subscriptions as flexible and customizable as possible.

Though it might sound counterintuitive, one of the most effective strategies for reducing customer churn around subscriptions is making it easy for customers to skip or reschedule an order. By providing flexible delivery options, subscription providers can empower their customers to stay with their business longer rather than canceling altogether. It can also be beneficial to offer subscribers multiple delivery frequencies—for example, choices for monthly subscriptions, weekly subscriptions, or deliveries on a custom interval. This way, customers can customize their deliveries to fit their schedule.

What is subscriber churn?

Subscriber churn is when customers stop using the recurring products or services of a subscription business over a certain period of time. Churn rate is one of the most important metrics for subscription businesses to track, as generally, customer acquisition costs are often far higher than those for retaining existing customers. By taking steps to reduce churn and improve subscriber retention rates, businesses can set themselves up for increased revenue and customer lifetime value (LTV), as well as monthly recurring revenue (MRR). There are several ways that a subscription business can calculate churn rate, but most important is to establish a baseline for your business and measure churn consistently over time to effectively hone your strategy.

How can subscription businesses reduce churn rates? 

There are several strategies subscription businesses can use to reduce customer churn rate. One of the most effective strategies for reducing subscriber churn rate is to make your subscriptions as flexible as possible, with options for customers to manage their own subscriptions (including product swaps and the ability to reschedule or even skip a delivery). This improves the customer experience in a way that encourages your customer base to stay with your business longer, increasing LTV and revenue.

What is involuntary churn? Voluntary churn vs involuntary churn

Involuntary churn (also referred to as passive churn) refers to when customers unintentionally opt out of a subscription business’s products or services. Unlike voluntary churn, where a customer actively decides to end their service with a subscription business, involuntary churn occurs due to failed transactions, such as failed payments when credit cards expire, when there are insufficient funds in a bank account, or when a credit limit is maxed out. Both passive and active churn pose major challenges to the health of subscription businesses, who not only rely on recurring payments, but also long-term customer relationships and customer retention. 

Optimizing payment processing to reduce involuntary churn 

One strategy subscription businesses can use to reduce involuntary churn is to communicate with customers when a credit card’s expiration date approaches. Sending the subscriber an email or automatic notification reminding them to update their payment information can help prevent payment failures before they occur, thus reducing involuntary churn and increasing customer lifetime value. Businesses can also consider using a payment processor or subscription management solution with functionality like automatic retries. Here, if a payment fails, the provider will retry the transaction on a specific cadence, often resolving payment issues behind the scenes without having to get customers involved.

What is shopping cart abandonment?

An abandoned cart is an online shopping cart that shoppers add items to, then exit the process before completing the purchase. When a site visitor adds products or services to their online cart, but neglects to check out, this constitutes shopping cart abandonment. Cart abandonment rate can be calculated by dividing a business’s total number of completed transactions by its total number of created shopping carts. Tracking cart abandonment rates can provide insight into problems with your sales funnel or checkout process. By optimizing the checkout process and reducing cart abandonment rate through cart recovery, ecommerce retailers can increase their conversion rates and revenue.

Why do customers abandon carts?

There are many possible causes for shopping cart abandonment, including unexpected shipping costs or shipping thresholds, a confusing return policy, a lack of coupon codes, a confusing checkout flow, and forced account creation to purchase. Depending on the cause of cart abandonment, creating options for guest checkout, being transparent about shipping costs and return policies, offering discount codes, and streamlining the checkout flow can all help prevent cart abandonment.

What is customer churn rate?

Customer churn (also referred to as customer attrition) is when customers stop using a business’s products or services over a certain period of time. Reducing churn and improving customer retention rates increases revenue and customer lifetime value for merchants. Conducting churn analysis is crucial for understanding the causes of customer churn, identifying where in the customer journey the churn occurs, and generating solutions to improve customer retention. 

Churn rate is one of the most important measurements for subscription companies to track. If the number of new customers joining your subscription program is less than the total number of customers lost from your brand, your business is losing its lifeblood. The “leaky bucket” is an analogy that is often used to envision customer attrition. Methods for reducing customer churn are known as retention strategies. 

Strategies for reducing churn in subscription businesses

Offering skips and swaps are two best practices to reduce customer churn, keep existing customers engaged, and boost brand loyalty. Allowing customers to skip or delay their deliveries retains them as active subscribers for a longer period of time, boosting lifetime value and increasing customer satisfaction. Swaps are another proven retention strategy for subscription model businesses, creating a more personalized user experience. Finally, conducting customer churn analysis is an important last step for understanding negative churn and optimizing any frustrating aspects of the service. 

What is digital shopping cart abandonment?

Digital shopping cart abandonment is when a prospective customer visits an ecommerce store, begins the shopping process, and adds items to their online cart, but does not complete the purchase. Most cart abandonment indicates a confusing checkout process, and can be caused by a variety of related issues, including unexpected shipping costs, an unclear return policy, and requiring shoppers to create an account to complete their order.

Reducing cart abandonment rate

Shopping cart abandonment rate can be calculated by dividing an online retailer’s total amount of completed transactions by its total number of created digital shopping carts. Monitoring ecommerce cart abandonment for your store, and conducting A/B testing to identify the reasons your shoppers abandon their carts, can provide key insights into issues with your sales funnel and/or checkout flow. Depending on the nature of the issue, improving the user experience via solutions like offering a guest checkout option, providing promo codes, optimizing online shopping for mobile phones, and offering free shipping or clarity around shipping pricing and returns policies can help reduce cart abandonment rates and increase conversion rates.

Abandoned cart recovery emails 

In addition to using strategies to reduce cart abandonment, online retailers can also attempt to recover abandoned carts. Cart abandonment emails are one key way marketers can improve their checkout completion rates. Here, the retailer can send a customized email with a direct link to the customer’s cart and checkout pages so they can complete the purchase as they left it. At this stage, ecommerce businesses can also provide further incentives, such as free shipping or deals on specific items in their carts, to encourage customers to complete their purchase. These abandoned cart recovery emails are another strategy ecommerce retailers can use to improve conversion rates and customer satisfaction.