Repeat Customer Rate vs Retention Rate: Which One Matters

Repeat customer rate is the share of your customers who have bought 2 or more times. Retention rate is the share of last period's customers you still have. If you do not sell subscriptions, repeat customer rate by first-order cohort is the one to run on.

What is repeat customer rate?

Repeat customer rate = customers with 2 or more orders ÷ all customers with at least 1 order × 100

Yotpo, Gorgias and CleverTap all give this formula. Count people, not orders. A customer with 6 orders counts once.

It answers one question. Of the people who bought from you, how many came back?

The number on its own is loose, because it depends on which orders you count and over what window. The fix is to measure it by cohort. A cohort is a group of customers whose first order fell in the same month. You then check who placed a 2nd order inside a fixed window. The full method is in how to calculate repeat purchase rate. It is the same metric under a different name.

What is retention rate?

Retention rate asks a different question. Of the customers you had at the start of a period, how many do you still have at the end?

Shopify's blog gives the standard formula.

Retention rate = (E − N) ÷ S × 100

• E is customers at the end of the period.
• N is new customers you got during the period.
• S is customers at the start of the period.

Take away the new ones, and what is left of the end count should be the old customers who stayed. That is the idea.

Repeat customer rate vs retention rate: what is the difference?

Here are the 3 formulas you will find when you search for these metrics. Only 1 of them is a retention rate.

Source Formula What it measures Yotpo, Gorgias, CleverTap Customers with 2+ orders ÷ all customers Repeat customer rate Shopify blog (End customers − new customers) ÷ start customers Retention rate Klaviyo glossary Customers who bought more than once ÷ customers who bought only once Neither. It can go over 100%

Some pages treat all of these as one metric. Gorgias lists customer retention rate and returning customer rate as other names for repeat customer rate. CleverTap says they differ but gives no retention formula on the page.

The Klaviyo row is the strange one. Klaviyo's glossary defines retention as the share of customers who "remained customers" over a period. Then its formula divides repeat buyers by one-time buyers. If you have more repeat buyers than one-time buyers, you get a number over 100%. That is a ratio, not a rate. Do not report it as your retention.

Why does retention rate break for most DTC stores?

The formula needs to know who is still a customer. A subscription tells you. Someone cancels, and they are gone.

A one-time order does not. Polar Analytics puts it well: without a cancellation event, churn is "inferred from silence." Churn is the share of customers you lost. Nobody emails you to say they will never buy again. They stop.

So what goes into E and S? Most brands reach for the customer count in Shopify. That is the trap. A customer record does not disappear when someone stops buying. Here is the math with made-up numbers.

1. Say Shopify shows 1,000 customers at the start of the quarter. That is S.
2. You get 200 new customers during the quarter. That is N.
3. Shopify now shows 1,200 customers. That is E.
4. (1,200 − 200) ÷ 1,000 × 100 = 100%.

You get 100% every quarter, whatever your customers did. The formula is fine. The input is wrong.

How do you calculate retention rate for a store without subscriptions?

Define a customer as someone who ordered in a set period. Then count directly.

1. Pick a period that matches how often people buy. Use a quarter for products that run out in a month or two. Use a year for things people buy once a year.
2. List everyone who ordered last period. That is your start group.
3. Count how many of them ordered again this period. Only people from the start group count.
4. Divide that count by the start group. Multiply by 100.

The customer retention rate calculator uses the (E − N) ÷ S shortcut. To get a real answer from it, fill in the 3 boxes like this.

• Customers at start: everyone who ordered last period.
• Customers at end: everyone who ordered this period.
• New customers acquired: first-time buyers this period.

One catch. Customers who come back after a long gap, from before last period, land in the end count too. So the shortcut can read a little high. The direct count in step 3 does not have that problem.

Which one should you track?

It depends on whether you sell subscriptions.

Your store Headline number Second check No subscriptions Repeat customer rate by first-order cohort Retention rate, with "customer" defined as "ordered in the period" Subscriptions Retention rate for subscribers Repeat customer rate for one-time buyers Both Track the 2 groups apart Never blend them into one number

For a store without subscriptions, repeat customer rate wins for 2 reasons. It needs no guess about who is still a customer. And it tracks the step you control: getting a first-time buyer to order again.

Retention rate is worth checking once a quarter. It tells you if the buyers you already have keep showing up. But it rests on a choice you made about what "active" means. Change the period and the number moves.

Racklify draws the same line. It says to use retention rates for subscription services and memberships. It says to use repeat purchase rate to see if customers reorder on their normal cycle.

What moves repeat customer rate?

What happens after the first order. The post-purchase flow gets the first product used. When someone goes quiet past their normal reorder date, the winback email flow brings them back. Both feed the same number.

For how the pieces fit together, start at the ecommerce customer retention hub.

Get the whole system

Repeat customer rate is the score. The flows after the first order are how you move it.

12 flows, 37 emails, one job: repeat purchases. Every trigger, every send delay, every exit condition, written out so you can build them this month.