Your returning customer rate is the percentage of customers that buy from your site more than once. Generally speaking, the higher this percentage, the better.

If you run your store in Shopify, you’ll be able to see your ‘Returning customer rate’ within the analytics section of your store dashboard. Otherwise, you can calculate it with the following formula: 

Returning customer rate = (Returning Customers / Total Customers) x 100

Why focus on getting customers to buy again?

In the early years of running an e-commerce business, it’s normal (and healthy) to focus on getting as many new eyes on your products as possible. 

But sooner rather than later, we’d recommend also devoting time to improving your returning customer rate, and we’d recommend this for a few reasons: 

• It improves your Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC) Ratio. It’s cheaper to bring a customer back than it is to acquire a new one; the marketing spend is either zero, or much smaller. 
• It’s a positive signal that your customers are happy. This in turn means they’re more likely to actively recommend you to others. 
• Investors want to see that you can bring customers back. If you ever seek external investment for your business, a healthy returning customer rate is a good sign.

How to improve your returning customer rate

Providing a great product and a great buying experience are both essential to encouraging repeat business. But if you’re ready to take things a step further, here are a couple of places to focus your attention.

Widen your assortment

A ‘deep’ product assortment is one that focuses on providing lots of different versions of one particular product. 

An online camera shop is an example of a site with a deep assortment. And this assortment strategy can be a good one; it allows you to become a real authority and go-to site within a niche space. 

But if the product is a one-time purchase, rather than something the customer will need to rebuy, this isn’t ideal for your return rate. 

If we continue the online camera shop example, they might want to consider branching out slightly into complementary products, such as camera bags, lenses, film, or other accessories. 

And if you can actively recommend the right extra products to the right customers, the benefits compound. 

James, a Health & Fitness Coach at Total Shape (a health and fitness ecommerce store) shared how this has impacted their business:

“One of the most notable impacts of personalisation in our business has been the ability to predict customer needs before they even articulate them. If someone’s always got protein powder in their cart, for example, they might get tips on meal plans that boost their protein or workout routines for building muscle.

The results have been impressive. After implementing this smart personalisation strategy, we noticed a 25% increase in the average order value. 40% of the customers who engaged with these personalised recommendations returned to buy additional products within the next month.” 

Create a frictionless, personalised checkout experience

77% of the shoppers who prefer Amazon over any other retailer prefer it because of the user experience and seamless checkout. Not the quality, price or selection of products; it’s that easy, personalised experience that keeps them coming back. 

A personalised checkout experience, by its very nature, looks different to every customer. That’s why being able to dynamically adjust your checkout experience and abandoned cart messaging according to their preferences is such a game changer. The problem is that, historically, it has been too expensive for smaller ecommerce brands. 

And that’s why we built FERO – a Shopify app that draws on 430 data points to offer each of your customers their ideal checkout experience, and improve your conversion rate on autopilot. We help you create frictionless experiences that keep your customers coming back. Try it free for 30 days.