Returning customers measures the number of customers who repurchased from your store in a given timeframe, typically a month. It's usually expressed as a percentage of total orders, but may also be recorded as a raw number.
Your eCommerce business's customer return rate is directly tied to its overall health. It's a barometer of overall loyalty to and engagement with your brand. A higher rate indicates that you're providing a positive customer experience and meeting your audience's needs and expectations.
A lower rate, on the other hand, may signify possible bottlenecks in your brand's customer experience or — in the worst case scenario — issues with your products.
In a more general sense, recurring buyers are the bread and butter of any successful eCommerce company. They're your most engaged, most loyal clientele. It's highly likely that in addition to providing you with repeat business, they're also serving as advocates for your brand, informing colleagues, friends, and family of your products.
This makes them a crucial part of customer acquisition, and a lynchpin for your store's continued growth and awareness.
There is no formulat for calculating your customer return rate. Simply determine the timeframe over which you want to measure your repeated customers, then determine how many people made more than one purchase within that timeframe. You can also use your customer return rate to calculate your repeat purchase rate.
Caption: You can filter your dashboard based on whether you want to track new or repeating orders
Note also that any customer who's purchased from your eCommerce store at any point becomes a repeat customer once they make a second purchase — no matter how far apart those two purchases may be.
Particularly in eCommerce, no metric exists in a vacuum. Your customer return rate is no exception to that rule. On its own, it simply shows you a breakdown of new customers versus recurring customers.
In order to maximize the insights gained from the metric, you'll want to do two things. First, measure it over a period of time, such as monthly or year over year. Second and most importantly, assess it alongside other core eCommerce metrics.
Caption: By visualizing your customer return rate alongside metrics like AOV, you can get a better picture of where your engagement efforts are succeeding (or failing).
The best way to increase your eCommerce company's recurring customers is by optimizing for retention — this means examining your sales funnel with the following questions in mind: