It is the single biggest driver of LTV for most consumer brands, and the number that separates businesses that can afford high acquisition costs from those that cannot. Measure it by cohort, so seasonality and changes in acquisition mix do not distort it.
Formula
Repeat purchase rate = Customers with 2+ orders in the period ÷ Customers acquired in the cohort
Model contribution lifetime value from repeat behaviour, then see your LTV:CAC ratio and payback month.
Related terms
- LTV (customer lifetime value)LTV is the total value a customer generates over their relationship with a business, best measured in contribution rather than revenue.
- Cohort analysisCohort analysis groups customers by when they were acquired and tracks how each group behaves over time.
Part of the growth marketing glossary by Shiva Sharma.