Understand customer retention for long-term success

Customer retention is an over-arching process that you need to build into your Shopify store.

You can't just add a loyalty program and call it the day. It's something you have to consider at all times and work to improve your retention at all levels.

I like to think of customer retention is the second stage of customer acquisition.

With customer acquisition, you get a new customer to show up and buy from you. When you can acquire a regular supply of customers at a profitable cost, your customer acquisition is optimized.

With customer retention, your focus is on getting them to come back to buy again (and again and again). That means you need to be nurturing their experience so they want to come back and buy. "Experience" meaning everything you do: the emails you send, the messages you use, the offers your create, the product experience itself.

Acquisition is much more transactional while retention is more behavioral.

If you're familiar with the concept of churn, customer retention is the direct opposite. Churn is customers who left over time, retention is customers who stuck around. Just like how churn has a measurement (churn rate), customer retention has a measurement (customer retention rate).

Customer retention rate is more common with subscriptions and stores that have a recurring component. Those stores will get the next order by default unless the customer cancels.

For non-subscription businesses, Repeat Purchase Rate is often a better measurement than the customer retention rate. Repeat Purchase Rate makes the recurring aspect optional and gives you a better idea of how you're performing overall.

Once you know your retention rate (or Repeat Purchase Rate) and can easily track it, then you can start the process to optimize it.

If you'd like to know what your Repeat Purchase Rate, Repeat Customer Insights calculates it for you automatically along with dozens of other customer retention metrics.

Eric Davis