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Ecommerce Retention rate: Ways to Calculate & Improve It

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Anyone in the ecommerce space should be concerned about getting and retaining customers. This is considering the rising costs of acquiring customers amid stiff competition. Customer loyalty statistics are also a concern considering 54.7% of all customers are loyal to multiple brands.


What Does Retention Mean in Ecommerce?

Customer retention can be defined as the number of customers you are able to retain over time. Typically, customers may be loyal to multiple brands at the same time, making it hard to have predictable revenue.

Ecommerce retention is generally a percentage of those customers who buy from you often/repeatedly. A good retention rate translates to steady revenue because you have more loyal clients. It’s stated that e-commerce brands have a customer retention rate of approximately 30%. However, the average customer retention rate by industry varies.

What Factors Affect the Ecommerce Retention Rate?

There are several factors dictating how many customers will be loyal to your brand over time. The main ones include;

1. Initial Customer Experience

The initial purchasing experience has to be enjoyable for you to increase your chances of having repeat customers. You should ask yourself if you have an easy and fun experience or a complex and stressful one.

Several things determine if your initial customers will have a good buying experience or not. Website navigation is at the top of the list of determinants of a good ecommerce experience. Websites that are easy to navigate offer better initial experiences when compared to complex navigation with too many options.

It also helps to have a good product discoverability experience. Your first-time customers should find a well-stocked ecommerce store. If you go out of stock, have backorder options. Having multiple payment options is also part of a good initial purchase experience.

2. Customer Service

The customer service experience you offer will also dictate your ecommerce customer retention rate. Customers are bound to return if they find the customer service pleasant. Customer service entails many things, from how fast you respond to customer queries to how you handle complaints, returns, and money-back guarantees.

3. Offers

Customers love offers and are bound to stay loyal if you give them more incentives than they can receive elsewhere. The type of incentive also matters. Customers are loyal to those brands which give valuable offers with significant savings.

Offers are among the best way to give a customer a reason to shop with you again. Popular offers used by ecommerce sites include discount coupons. Other related incentives bound to boost customer retention include referral and loyalty programs. You can have your own programs to reward customers for recommending your brand to friends and family. You could also offer redeemable points for every purchase.

4. Reliability

Once your ecommerce customers have bought something, they’ll need it delivered as promised. Ecommerce brands that are reliable tend to have a higher customer retention rate. If you deliver purchased goods in record time, your customers are bound to be more loyal than customers of a brand that delays orders and/or delivers damaged packages. Issuing fast shipping, tracking information, and free shipping is a great way to retain customers.

5. Personal Experience

Customers want to feel special, and there’s no better way of doing this other than personalizing the experience. Considering brands already have some information about their first-time clients, this can be used to personalize the experience. A perfect example of customer retention aided by personalized experiences would be sending holiday, birthday, anniversary or valentine wishes. Sending relevant marketing campaigns is also a great way to offer a personalized experience.

what will Affect the Ecommerce Retention Rate

How to Calculate Ecommerce Customer Retention Rate

You need to know the existing number of clients you have at the beginning of a certain period, the remaining customers at the end of that period, and the number of new clients you have added within the period.

Minus the number of remaining customers at the end of the period in question (E) from the number of customers added within the period (N), then divide by the initial number of customers at the start (S).

The average customer retention rate(CRR) formula is, therefore: (E-N)/S * 100

For example, If you had 2000 customers at the beginning of Q2 and ended the Q2 with 2,200 customers, after having won 1000 new ones over the span of Q2, your CRR would be (2200-1000)/2000*100=60%. 

Or you can simply count the customers who bought the products more than twice during Q2, then divide by the initial number of customers.

Calculate Ecommerce Customer Retention Rate

How You Can Improve Retention Rate

If you have low customer retention, all is not lost. There are tips you can consider to improve. The main ones include;

I. Improving User Experience

As mentioned above, customers will return to your ecommerce store if they have a good initial experience. User experience can improve because of many things like redesigning your ecommerce site to be simple to navigate to reducing call-to-actions. You can also tweak other aspects of website design, like speed, to ensure your site loads fast. Customers should also get faster delivery and quicker complaint mechanisms.

II. Improve Product Quality

Sometimes all it takes is a better product to keep having repeat customers. You should aim to make a better product/service than your competitors while maintaining competitive pricing. Customers are largely driven by quality and won’t hesitate to buy again even if other aspects like offers aren’t available.

III. Own Up to Mistakes

Most customers vow never to purchase certain products/services based on how a mistake is handled. In fact, your brand is bound to get a negative review from a disgruntled customer who didn’t get their product replaced as agreed. Acknowledging your mistakes and fixing them is a great way to keep a client. Whether it’s your fault or the manufacturer’s fault, acknowledge and fix mistakes; otherwise, your customer will have a reason to leave.

IV. Give Offers/Incentives

As mentioned, your customers are bound to appreciate free things in the form of discount coupons, redeemable points, and affiliate programs. Offers and incentives make things cheaper which is a great reason for customers to buy from you repeatedly.


Most ecommerce brands depend on their loyal customers (30% of all customers) for survival. One-off sales won’t give you a predictable turnover which dictates many other things like inventory, support staff needed, and average profitability. From above, you now know what factors affect shopify retention rates and other ecommerce retention rates and what you can do to boost your rate.

Ecommerce Retention rate FAQs

1. What is a good retention rate for ecommerce?

Anything above the average 30% is good. But the average customer retention rate by industry varies.

2. What’s the average customer retention rate formula

(E-N)/S * 100 where N is the number of customers added within the period, E is number of remaining customers and then end of the period in question and S is the initial number of customers at the start

3. Repeat customer rate vs retention rate, what’s the differences?

The repeat customer rate is a % measurement of all customers who make repeated purchases over a given time frame. Retention rate is the % of customers who stay with a brand over a given period, excluding new customers acquired within that period.

4. Churn rate vs retention rate. What’s the difference?

The churn rate measures the no. of customers lost over time, while the retention rate is a measure of customers retained over time.