The Repeat Customer Rate (RCR) is a metric used to measure the percentage of customers who make a second purchase or more from a business. It is a measure of customer loyalty and is used to evaluate the effectiveness of customer retention efforts.
The formula for RCR is:
RCR = (Number of repeat customers / Total number of customers) x 100
In this formula, “number of repeat customers” refers to the number of customers who have made a second purchase or more from the business. “Total number of customers” refers to the total number of customers who have made at least one purchase from the business.
For example, if a business has 100 customers and 50 of them have made a second purchase or more, the RCR would be 50/100 x 100 = 50%.
A high RCR indicates that the business has a strong base of loyal customers who are likely to make repeat purchases, resulting in a more predictable revenue stream and lower customer acquisition costs. On the other hand, a low RCR indicates that the business may be struggling to retain customers and might need to re-evaluate its customer retention strategy.
It’s important to note that the RCR is a relative metric, the industry standards and customer lifetime value of the company should be taken into account to evaluate the performance of the company. Additionally, RCR can be complemented by other metrics such as Customer Retention Rate (CRR) which measures the percentage of customers who remain active over a given period of time, and Customer Acquisition Cost (CAC) which measures the cost of acquiring new customers.
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