Calculating your customer purchase latency

Knowing your stores customer purchase latency can be used to dramatically increase your repeat purchases.

Everyone in business has heard that truthism about how it's cheaper to have repeat customer than to find a new customer.

Knowing your customer purchase latency can improve the chances of repeat sales while also optimizing how much you make from each sale. For more non-technical information on this, read Customer Purchase Latency and capturing more reorders.

In here I'm going to dig into how to calculate your customer purchase latency.

Caution, math ahead! But not that much...

Example data for a store

First, we'll need to set some assumptions so you can understand what we are and aren't covering here:

Next we'll need some customer data to work with.

1. Average the purchase times for all customers

2. Calculate the average order value of each purchase

3. Draw some conclusions

Based on this data you now know that:

4. Optimize your store

With that in hand, you can set up different marketing campaigns to try to improve things.

For example:

Around Day 21 (before the average time for the 2nd purchase) you send an email with no discount reminding your customer about your products. This could improve the speed of the second purchases.

Then sometime around Day 60-100 (between the 2nd the 3rd purchase averages), send another reminder email about your products. This could increase the number of third purchases.

Around Day 100-120 (after the average time for the 3rd purchase) if the customer hasn't made a third order, send them another email but offering 10% off. This would incentive people who wouldn't make a third order to purchase.

Advanced latency strategies

Now, if you wanted to go beyond this simple version, here are some more advanced ways to calculate your latency:

The important thing with customer purchase latency is to calculate it often. It won't change very much from day-to-day but from week-to-week and month-to-month it can vary widely. You can also see how it took a bit of work to calculate it for only 3 customers with 7 orders, once you have a decent volume of sales it would be time-prohibitive to calculate this by hand.

That's why I recommend using Repeat Customer Insights to calculate your customer purchase latency. It'll load the data from your Shopify store and automatically calculate your latency for all customers, across multiple different times and customer segments.

Learn what your customers are actually doing instead of just guessing

One of the best ways to build a sustainable business starts by getting your customers to come back. Mastering that simple process can be difficult, but builds a lifelong business.
Repeat Customer Insights can help you understand your customer's behavior. With its collection of behavior reports, you can see what they're actually doing instead of guessing and having your efforts fall flat.

Learn more

Topics: Customer purchase latency Customers Metrics Shopify development

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