Benchmarking | Customer

The customer section of the Benchmark report focuses on the ability to retain and monetize the customer base. We advise viewing metrics such as Order Frequency and Customer Lifetime Value alongside other sections to get a full understanding of how the business is performing.

KPI definitions and interpretation

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Twelve Month Average Purchase Frequency

This KPI details the average number of purchases a customer makes in a 12 month period. Purchase frequency directly impacts lifetime value; the more customers purchase, the higher the value. A low purchase frequency can signal an issue with product quality or with retention activities.

Twelve Month Repeat Purchase Rate

This KPI details the percentage of customers who make a repeat purchase in a 12 month period. Similar to the previous metric, the repeat purchase rate impacts overall lifetime value. A higher rate is generally better. A low repeat purchase rate could signal issues with retention activity, product quality and customer experience.

Twelve Month Lifetime Value (LTV)

This KPI details the average value of a customer in the 12 months after they were acquired. This is the sum of all their purchases in that period. Where the KPI is lower than the benchmark, the business's customers are worth less than the customers of their peers.
A high LTV can be driven by a number of factors:

  • High selling prices
  • High repeat purchase rate
  • High repeat purchase frequency

Similarly to AOV, a high LTV gives the business flexibility in how it operates. As it's possible to absorb higher costs, the business can spend more to acquire new customers and outcompete peers. It may also spend more on shipping, enabling expansion into other markets.

Twelve Month Average Purchase Frequency by Month of Acquisition

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This chart shows the average number of orders per customer in the twelve months from their acquisition, for each calendar month, for customers acquired during that month.

Where the KPI is lower than the benchmark, customers acquired by the business during that month make fewer purchases in the year following their acquisition than the customers of peers.

The trend represents how average purchase frequency is changing over time and how that compares to peers.

It is normal for this line to decrease as it moves closer to the current month; what is important is the relative slope of the line to benchmark. A steeper decline shows that customers acquired more recently are purchasing less than what is expected. It signals a deterioration in the quality of customers being acquired or an adverse change in customer experience.

Twelve Month Repeat Purchase Rate, by Month of Acquisition

mceclip4.pngThis KPI details the repeat purchase rate of customers acquired in a given month. The trend represents how repeat purchase rate is changing over time and how that compares to peers.

Again, it is normal for this line to decrease as it moves closer to the current month with the relative slope of the line to benchmark being significant. A steeper decline shows that customers acquired more recently are less likely to make a repeat purchase than what is expected. 

Twelve Month Lifetime Value, by Month of Acquisition

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This graph shows the lifetime value (LTV) of customers acquired in a given month. The trend represents how customer value is changing over time and how that compares to peers.

This too will typically decrease as it moves closer to the current month with a steeper decline showing that customers acquired more recently are of lower value than what is expected. It signals a deterioration in the quality of customers being acquired or an adverse change in customer experience.

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