Q&A - What is meant by repeat business and why is it important?

Repeat business is all about encouraging customers who buy for the first time to buy again and again!

A business invests a lot of effort and cash in trying to get a customer to purchase a product for the first time. This is known as product trial. Much advertising is aimed at encouraging customers to try a new product, or switch from an existing competitor.

After a new product has been tried once, its success can be measured in how quickly, how often, and in what quantity it is repurchased. Repeat purchase refers to the number or percent of customers who purchase a second time, or to how often they buy again.

The problem with advertising is that it is very expensive. A business is unlikely to be successful and profitable if it has to keep advertising heavily in order to generate demand from new customers. It is much better if customers can be encouraged to become loyal to the product – even better, to recommend the product to their friends and family!

Achieving a high level of repeat purchase is good news for a business. So what is required?

Firstly, the product should be of the right quality. A sub-standard or low quality product is sure to disappoint first-time customers. They are unlikely to buy again or recommend the product to others.

Secondly, a business should do all it can to develop an effect relationship with existing customers. This includes activities such as:
- Regular communication (e.g. email newsletters)
- Incentives for loyalty (e.g. promotional discounts)
- Research into customer needs and wants (e.g. through customer surveys)