KPI

Returning Customer Rate

The returning customer rate, or repeat customer rate, is an eCommerce metric that measures customer retention and the loyalty in your customer base. Although many businesses focus on new customers, measuring loyal customers is an important metric to track because it can help you increase profitability without even having to conduct new marketing campaigns.

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    Templates using this KPI

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    Integrations using this KPI

What is a returning customer rate?

The returning customer rate is a measure of how many existing customers made two or more purchases within a given time frame. This includes first-time customers making their first purchase, then coming back to buy something else from your company soon after. This metric shows customer loyalty and the number of customers your business can convert into repeat customers who value your company or brand’s services because of its customer experience, incentives, new products, and pricing.

The higher number of returning customers you can bring to your site, the higher the customer lifetime value (clv) your customer will see. With a higher customer retention rate, you have a better chance of increasing profitability and seeing growth in your eCommerce business. 

How to calculate returning customer rate

It is fairly simple to calculate the returning customer rate. It is just a percentage that represents the portion of your customer base who are returning customers.

The returning customer rate formula:

(Number of customers who have made a purchase before / total number of customers)*100 = Returning customer rate

What is a good returning customer rate?

This metric will vary by industry, but it is essential to be increasing your company’s new customer acquisition, and encouraging first-time buyers, while also ensuring that your current customers are satisfied and that you develop a strong customer relationship. For most eCommerce businesses, the returning customer rate is around 20-30%.

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What is a bad returning customer rate?

A returning customer rate of over 50% may indicate that you are not doing enough to foster new customer acquisition. A rate lower than 25%, however, may indicate that your customer satisfaction is not high enough and that you could be doing more to increase your repeat purchase rate.

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Returning customer rate examples & templates

Your returning customer rate and all your customer data can be tracked in reports already filled with important metrics for your objectives. Here are some of them:

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Ecommerce report template Ecommerce report template

A report with all the most important metrics for your ecommerce site, like shopping cart abandonment, click-through rate, and revenue.

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Executive report template Executive report template

This dashboard template is filled with metrics your C-suite will want to see. Show them your revenue, new customers, churn rate, and more. You can also add some customer satisfaction KPIs, gross margin, or customer data to have a better overview.

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Google Analytics report template Google Analytics report template

Check the number of customers, traffic, customer journey through your website, and more with this easy-to-use GA template.

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Returning customer rate best practices

If your returning customer rates are not meeting your expectations, consider the following strategies. 

Returning customer rate best practices

step 1 icon Social media and email marketing

By staying active in your communications, you can be sure that you are consistently informing your customer base of new products in your eCommerce store and new opportunities and releases that they could take advantage of. These tools are promoters for your business and can help you drive your customers back to your online store or Shopify site to make an additional purchase, or to increase their purchase frequency.

step 2 icon Loyalty program

Developing customer loyalty programs helps eCommerce brands meet metric benchmarks, as they incentivize customers to continuously make purchases of the online store. By providing rewards opportunities, you can enhance the clv of each customer and encourage them to make purchases within a given period of time by putting deadlines, or timeframes on the rewards. These are easy to run and can be organized by setting up automation tools.

step 3 icon Referrals rewards

Encouraging existing customer segments to advocate for your products and recruit their own network to become customers is a great way to use word-of-mouth to improve your conversion rate. Giving your customers a reason to recommend to a friend by offering them a reward in exchange will help them encourage people to use your online store rather than going to Amazon by default.

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