How to Measure Repeat Purchase Rate and Brand Loyalty

Why Loyalty Is a Key Part of Brand Health

Brand loyalty is a key component of brand health, and it shows in whether consumers keep coming back. Loyalty to a brand typically means a consumer buys either only your brand or mostly your brand in the category where you play. It measures repeat, but also the longevity of repeat. Are consumers always buying your brand, or are they switching around?

How loyal your consumers are shows how strong their connection is to your brand, both emotionally and functionally, meaning the product works really well for them. A brand that has that connection, so that consumers keep buying it above competitors, is a strong brand.

Loyalty sits at the bottom of the purchase funnel. Awareness, consideration, and purchase get consumers to try you, and loyalty is what keeps them coming back. To see how the full funnel works, read Purchase Funnel Metrics: See Where Consumers Drop Off.

Loyalty is also a leading indicator of brand health, as covered in Leading and Lagging Indicators of Brand Health: Act Early. Repeat usually weakens before total sales do, because new trial can mask a leaky base for a while. By the time sales drop, the loyal buyers may already be gone.

How to Think About Loyalty: Not All Repeat Is Equal

Loyalty comes from repeat sales, but there are different levels of repeat, and each one means something different for your brand.

Some consumers never repeat. Their experience with the product wasn't very good, or maybe they didn't see the value in it. Or the product was good but too expensive. There are a lot of reasons a consumer might not repeat, but product quality is a big one.

Some consumers repeat but switch between brands. They like the product well enough to buy it again, but they move around. Salad dressing is a good example, where consumers switch based on flavor instead of sticking with one brand. That happens when consumers see all the brands as having about the same equity or connection, so they look for the flavor that delivers what they want, and one brand may deliver a flavor better than another.

The last group is truly loyal. They buy only or mostly your brand because they have an emotional connection to it, and the product delivers what they're seeking at a price they feel is a good value.

Not all loyalty is equal, though. Some consumers buy the same brand every time out of habit or convenience, not connection. They look loyal in the data, but they're more fragile, and a competitor's promotion or an out-of-stock can pull them away.

How to Measure Repeat Purchase Rate and Loyalty

Repeat purchase rate is the percentage of consumers who tried your brand and came back to buy again. It's the starting point for measuring loyalty, and a few other measures add to it.

Share of requirements shows how much of everything a household buys in the category goes to your brand. A consumer who buys you every time and a consumer who buys you only now and then can both count as repeat buyers, but the share of requirements tells them apart.

The data comes from a few places: household panel data from NielsenIQ or Circana, retailer loyalty card data, and your own direct-to-consumer or email list customers. Surveys add the attitudinal side, such as the brand consumers say they buy most often or which brand they would buy if yours wasn't available.

Track these over time. The trend matters more than any single number.

Why Product Quality Drives Loyalty

Product quality drives loyalty because building loyalty isn't just about the emotional connection. More importantly, it's about the product experience. Is the product good, and does it deliver on consumers' needs?

Consumers switch between brands when the product tastes the same or works the same as everyone else's and there's no real differentiation between them. And an emotional connection alone won't hold consumers if the product slips.

Tracking Product Quality Before Loyalty Slips

If loyalty depends on the product delivering, the way to know it's delivering before loyalty goes down is to test it with consumers and track it over time.

Companies often change a product's formulation, usually to reduce costs and improve margin. Many times that actually creates a better product. Other times the goal is for consumers not to notice any change. But a lot of little changes, made a little at a time, can add up, and then all of a sudden, years down the road, the product tastes very different than it used to, and maybe not for the better. Consumers even have a name for this: skimpflation.

This happens because cost-reduction tests usually aim for parity with the current product, so each small change passes. But each test compares against the last version, not the original, so the small differences stack up.

That's why product quality should be part of your tracking and your brand health assessment. Always benchmark it against the original, so if you start to creep away, it shows up sooner rather than later. And always test against the competition.

Competitors may be doing the same thing and changing their formulations for better or worse, so it's important to understand your gap to them. Do you have a large gap in your favor? Is that gap narrowing? Are competitors doing better than you are? The gap changes over time, so it has to be tracked as well.

There are also low-cost early warning signals. Product reviews, customer service complaints, and social comments can often pick up a quality slip before sales do.

Is Higher Loyalty Always Better?

Not always. Highly loyal brands can be polarizing. They're loyal because they have a fan base that loves a distinct flavor or texture, but that may not be the majority of consumers. High loyalty is good, but it's hard to get really high loyalty without being more of a niche brand.

So loyalty isn't about being the absolute number one. It goes back to your business objective: who you're targeting, how niche or mass market you are, and what you're trying to achieve: stability or growth.

Where to Start With Loyalty

Declining loyalty is never a good sign. It's an early signal that something about the product, the value, or the connection is slipping, and it's easier to address now than after sales drop.

A simple place to start is to pull your repeat purchase rate for the last two years and find out when your product was last tested against the original.