Some one-time customers regularly purchase a product or service, so the difference may not be as apparent as you think. It is critical for your online business to differentiate between these customers.
This differentiation will help you better understand your customer’s behavior and create an appropriate action plan to grow your business month over month.
What is a recurring customer?
A recurring customer subscribes to purchase a service or a product in a standard timeframe, which could be weekly, monthly, or annually.
We can say that these are the ultimate types of customers because they are committed to paying for your service or product through a subscription plan.
- Netflix users are recurring customers because they are required to pay for their monthly subscription to access their content.
What is a one-time customer?
A one-time customer purchases a product or service just one, or sometimes occasionally.
These customers do not require having your product or service in a standard timeframe because they might need it once or twice.
- Most eCommerce sites users are one-time customers because they go to the website to add an item to the cart to checkout directly without creating a user account. These customers purchase a product or service just one and never return to your site to buy again.
Churn on both customers:
It is easy to get the churn calculation for recurring customers because we already know what type of subscription they have and when the billing cycle end.
On the other hand, this calculation gets complicated for one-time customers, because most of these customers never intended to be recurring customers for your business in the first place.
Having said that, if you ask yourself why you would like to calculate this KPI, then?
As we mentioned before, recurring customers are the ultimate customers because you do not need to spend an extra dollar amount to acquire them (they are already acquired).
Your only job is to retain them. Recurring customers tend to spend more over time by upgrading their subscriptions or adding add-ons.
Focus on turning your one-time customers into recurring customers:
- If you are an eCommerce site, offer the option to create a customer profile to allow users to control better what they have purchased in the past and enable them to create a wishlist for future purchases.
- Always promote profile account creation by providing a discount or coupon for customers who go to your website to create a profile account before purchasing one of your products. Of course, you will always have the option to checkout as a guest for those customers who genuinely want to be a one-time customer.
- Promote big in your website subscription-based products. Put together a gift basket of your top-selling products to be shipped out weekly, monthly, or annually.
Benefits of turning one-time customers into recurring customers:
1- A solid Monthly Recurring Revenue. This KPI will not vary abruptly month over month because you will have a customer base purchasing your product or service throughout a subscription program.
2- Due to your business model, you’ll gain new customers every single month, adding to your revenue.
3- Sales will always play a key role in your growth, but you will probably survive even if the month is a bust.
4- You will operate your business like the big players because you will know how to accurately calculate your purchase frequency rate, churn, average revenue per customer, MRR, ARR, and all those KPIs that will make your business bigger and bigger.
If you genuinely want to grow your business like the big players in your industry, connect your PayPal or Stripe account for free here to have access to more than 100 KPIs in real-time.
Radix will help you to turn your one-time customers into recurring customers.
Stop investing time in spreadsheet analysis and focus on making the right decisions to grow your business smartly and faster.