Understanding Purchase Frequency Data and Its Advantages for B2B Ecommerce

Data Analytics

Importance of Purchase Frequency Data

One of the key customer-retention metrics for any B2B company or Ecommerce retailer to track is purchase frequency data. Stay on top of your targets and optimize your strategy accordingly, and you should see a significant lift in sales. That’s partly because purchase frequency data draws a direct line to your most valuable customers. Since roughly 41% of an Ecommerce store’s revenue comes from just 8% of customers, there are some serious business benefits from increasing the frequency of their purchases. Find out how to calculate purchase frequency data and what to do with the insight. 

Understanding Purchase Frequency

Purchase frequency refers to the number of times a unique customer makes a purchase within a specific time period. It’s an essential element of sales forecasting, but different business sectors will have varying rates of purchase frequency. For fast-moving consumer goods, for example, a retailer can expect units to fly off the shelves on a daily or weekly basis. For higher ticket products (cars, white goods) or long-term services (SaaS or insurance), on the other hand, consumers are more likely to buy at a quarterly or annual pace. Purchase frequency is similar to, but not the same as, the following:

Purchase Frequency vs. Repeat Customer Rate

The former tells you the average number of purchases per customer within a given period (emphasis on the product), whereas the latter tells you how many new customers become return buyers (focus on the customer). 

Purchase Frequency vs. Customer Reorder Point

Purchase frequency is a tracking metric that gives you a snapshot of your business’s health. Customer reorder point, by contrast, is a trigger mechanism designed to ensure that inventory levels anticipate demand. 

How Is Purchase Frequency Determined?

To calculate your purchase frequency rate, simply divide the total number of orders or sales within a predetermined period by the number of unique buyers. Compare that figure with the repeat purchase rate to gauge customer retention. Measuring the time between purchases completes the picture, giving your sales teams valuable insight into the cycles of consumer demand and helping them time campaigns more efficiently. 

Why Is Purchase Frequency Important?

The appeal of purchase frequency is that it’s one of the few metrics that a business can influence directly and relatively quickly. Compared to lowering the price point through discounts or bulk deals in order to encourage new or existing customers to buy more (greater average order value), focusing on purchase frequency appeals to your repeat customers. These are your business’s most important source of revenue, given that they typically spend 300% more than new customers. In fact, a business can boost profits by an average of 75% with just a 5% improvement in customer retention.

Monitoring a customer’s historical purchase frequency can also help you see when they’re overdue for purchase, helping salespeople know when to reach out for their upcoming order. For example, If their normal purchase cycle is 30 days, a business could spot that it’s been 35 days since their last purchase, so it’s worth contacting their procurement specialist. Proactive businesses can prevent this from happening in the first place by reaching out on day 27 to begin arranging that next 30th-day order.

In either instance, you’re working to maintain some predictability in your sales from your most loyal customers, ensuring that the business:

  • Sustains its existing clientele
  • Converts new customers to recurring customers
  • Builds up the frequency with other customers who may not buy as often

Additionally, diving into the data where purchase frequency is concerned also helps your business manage inventory better. With full transparency over the sales cycle, your business is less exposed to the expense of holding excess inventory in the warehouse, and less likely to suffer out-of-stock scenarios because of unexpected peaks in demand.

The Advantages of B2B Purchase Frequency Data

Once you know how often each customer can be expected to buy your product or service, you can target your sales and marketing efforts more effectively. The goal is to increase customer lifetime value (CLV) and sales, and by extension business revenue. 

1. Sales team efficiency 

With up-to-date purchase frequency data at their fingertips, sales teams can reach out to customers when they have passed their average purchase frequency time and offer them a nudge to buy. This is also a great way to retain customers and convert new ones.

2. Discounted sales

Discounting is a fail-safe tactic, but it’s a last resort too. Discounting or bundling shouldn’t be necessary if all other strategies are working properly, but it’s a good way to offload surplus or end-of-season stock. 

3. Personalization and email targeting

Encourage your new customers to sign up to your email list in order to nurture them through email; this is still one of the most cost-effective retention channels a business can deploy. Use the data you collect about your customers to enhance their experience with personalized offers and content.

4. Subscriptions

Lock customers into a regular purchase cycle with a subscription or membership. It’s a great way to boost customer loyalty, and makes sales forecasting more accurate. The flip side is that your subscription customers will expect perks and discounts

5. Loyalty programs with rewards

Similar (or part of) the above, rewards programs encourage customers to buy more frequently by allowing them to accumulate points with each purchase. Not only do they keep them away from competitors, but they also keep them coming back more regularly. 

6. Referrals

Your existing customers are one of the most powerful lead magnets for your business. Encourage them to share their good experience with their network, leave reviews and introduce new business in return for a commission or reward.

How Zoey Can Help

Zoey’s intuitive platform gives your business visibility over your customers’ purchase frequency data. See where your inventory is, what direction customer demand is heading and how often your buyers are making a purchase. It’s your key to a lean, agile and profitable business. Request your free demo today:

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Nick Marshall is a freelance writer from the UK covering B2B marketing, emerging tech, payments and Ecommerce. He lives on a tiny island with slow internet in the French Caribbean, but was formerly an agency copywriter in the UK.

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