Second purchase is the charm

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Retail marketers should be focusing on repeat buyers, not acquisitions. (iStock/Rawpixel-Ltd)

Retailers know that a second purchase is usually the key to increasing a customer's lifetime value. Still, some retailers never get past the first purchase by providing follow-up communication with the shopper. 

Retail marketing company Bluecore examined the post-purchase messaging to customers—80% of whom were first-time buyers—from 16 apparel companies and found that second-time buyers are 130% more valuable. And although customer value does continue to grow with each purchase, the biggest jump in value happens between the first and second purchases.

Many of the second transactions, 60%, occur within 100 days of the first purchase. After that 100 days, the chances of a second purchase drop below 10%. But the research shows that even covering just 5% of these 80,000 one-time buyers could lead to $550,000 more in revenue over the next two years. 

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So why are retailers so focused on first-time buyers? Jared Blank, senior VP of marketing and insight at Bluecore, says that traditionally, marketing has always been focused on customer acquisition. Looking back on when e-commerce began, a retailer's main goal was to drive traffic to the site and get consumers to buy. 

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However, Blank believes there is a less obvious reason retailers focus so much on acquisition: Retention is so difficult to accomplish. 

"A true retention program requires a myriad of data and someone to make sense of it," Blank told FierceRetail. "As any retail marketer knows, this typically leaves you running up against data silos, organizational resource constraints and a feeling of not knowing where to start. If you’re able to connect your customer data to your most unique asset, your product data, you can begin to support relevant experiences that leave your customers coming back for more."

So for retailers that are ready to switch the focus to second-time purchasers, Blank suggests starting by taking a good look at how customers interact with products. 

"Every interaction is a little hint into your customers’ motivations and being able to pull that out and use it to fine-tune your communications is key," he said.

And if a person has already bought from the retailer twice, there are certain questions the retailer should ask: How long was the time between purchases? What product category did the customer purchase from each time? How does that compare to other customers who bought similar products? 

"Having the ability to answer these questions quickly is crucial to creating repeat purchasers. Insights from the data should guide your decisions," he added.