The Number of Items in a Shopper’s First Order Indicates Future Behavior
We've analyzed over one million e-commerce transactions and we have some tips to share.Posted in Customer Retention, E-Commerce, Data Analysis, Blog on 14 October 2015 by:
A whopping 62% of customers will never place a second order from an online retailer’s site. In fact, only 16% of customers will ever make more than three orders. To generate repeat business, it is imperative for an online retailer to understand how consumers behave during their first transactions and then do everything it can to increase the chances of getting them to become repeat customers.
One factor that can be used to determine whether a first-time customer is likely to become a repeat customer is the number of items purchased in the first order. We examined over one million transactions by online shoppers over a two-year period across a variety of categories including fashion, gadgets, fast food and others. Our findings were clear: the more items customers purchased in their first order, the more likely they are to later place a second order.
Our research determined that while 50% of shoppers buy exactly one item during their first order, a shopper who purchases two or three items is 36% more likely to place a second order than a shopper who purchased just one item in the first order. Shoppers who purchase four or five items in their first order are 77% more likely to place a second order, and shoppers who purchase six or more items in their first order are more than twice as likely to place a second order.
Shoppers who Purchased More Items in their First Order are More Likely to Become VIPs
We also discovered that the more items a shopper purchases in his or her first order, the greater the likelihood that that person will become a “VIP Top Shopper,” which we define as being among the top 10% of all customers in terms of overall amount purchased from a site. For example, only one of 17 customers who purchased one item in their first order will go on to become a VIP, but the chances of them becoming a VIP increases by 50% if they purchase two items and by nearly 300% if they purchase three or more items in their first order.
More Items in a First Order Also Indicates More Future Orders
Shoppers who purchase more items in their first order are also more likely to return and place more future orders.
- Customers who purchased two items in their first order placed an average of 7% more future orders compared to shoppers who purchased only one item in their first order.
- Customers who purchased three or more items in their first order placed an average of 14% more future orders than shoppers who purchased only one item in their first order.
How to Increase the Number of Items in a Customer’s First Order
As the research above shows, shoppers become more valuable with each additional item they purchase as part of their first order. Knowing this, online retailers should encourage their first-time customers to increase the number of items in their first order. Some of the more effective strategies we’ve seen for increasing this metric include:
- Make personalized recommendations: Before a shopper checks out, show them other recommended items they might be interested in based on the items they are purchasing or those they have browsed. By mining data from previous customers, online retailers should be able to tell which other items are most often bought by shoppers who are about to buy a particular item.
- Offer “impulse items”: Just like a grocery store will try to sell shoppers a stick of gum, lip balm or hand sanitizer in the checkout lane, try tacking on inexpensive but popular “impulse items” during the checkout process.
- Offer discounts and promotions for additional items: Consider offering a special promotion like free shipping or a steep discount (such as “Buy one more and get the third one free” or “Get a second item for half off”) on additional items.
- Encourage social sharing: Increase the number of items in their first order and get word-of-mouth buzz by encouraging shoppers to share their purchase with friends through Facebook, Twitter and other social channels and offering discounts on additional items when they do.
- Gamify the purchasing experience: Try using gaming mechanics, such as a digital punch card, in which the more items shoppers purchase, the more free items or bonuses they’ll receive or the higher discount they’ll get on their next order.
After the First Order, It’s Not Too Late!
Crossing the second-order barrier is one of the biggest challenges for online retailers; even if a retailer wasn’t successful at getting the customer to increase the number of items in their first order, they should still invest effort in encouraging customers to return for a second purchase. There are many strategies for enticing them to do that. Marketers can send customers personalized recommendations, for instance, and special discounts and promotions on additional purchases. Marketers might also try running a re-targeting campaign on Facebook, the Web or other channels, or contacting customers through email, push notifications or their other preferred channels. It is important to keep in mind that this is a time-sensitive opportunity—it is important to engage customers while their first purchase is still top-of-mind.
Still, our data clearly shows that the more items a customer buys in his or her first order, the more likely that customer will become a long-term repeat shopper.