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Why Is Customer Retention Important to Shopify Stores?

Published on:
May 11, 2022

Customer retention plays a major role in the success and growth of any business. If you proceed with it in a knowledgeable manner, it can help your business thrive. The basis of customer or consumer retention is to use available data to determine why customers leave, and to employ strategies to convince them to stay on and make larger purchases.  

What is Ecommerce customer retention?

To put it simply, customer retention means having existing customers continue to buy goods or services from your business. When an already converted customer comes back to you for more, it implies that you have encouraged them to look to your brand for the satisfaction of their needs.

How to calculate customer retention rate:

There exists an easy to remember formula to calculate the rate of customer retention.

To calculate the Ecommerce customer retention rate, determine the number of customers you acquired over a particular period of time. Subtract that figure from the total number of customers you have at the end of that phase. Take this number and divide it by the number of customers you had at the beginning of the period, and multiply the result by 100.

(Total customers at end of period - new customers acquired) / Customers at beginning of period * 100

For example, let’s say you started a quarter with 2500 customers, out of which only 700 made a purchase by the end of the quarter. Also, you acquired 800 new customers in this quarter. The following will be your customer retention rate:

(1500-800) / 2500 = 0.28

The math states that you have retained 28% of your customers over the last three months, whereas the others have not come back to you. 

Why is customer retention important, especially to Shopify stores?

There are five main reasons why customer retention is important to any business or organization operating on Shopify: 

1. Retention of existing customers is cheaper 

It is cheaper to retain existing customers than to acquire new ones. On average, new customer acquisition costs about 10 times more than it does to retain old ones. Retaining old customers leads to lowered marketing costs as organizations do not need to educate new buyers on their products and services. Returning customers are already familiar with what you can offer, therefore, marketing your products towards this audience is not as costly.

Smart campaign flows can be designed and automated to capture customer actions in the form of events, and these events can further trigger specific campaigns like Emails, SMS, push notifications, in-app pop ups which can contribute to your cause in case of renewals, upselling, and cross selling to your customers.

Of course, it is not as complex as it sounds and ShopAgain does all that for you effectively, along with giving you sophisticated analytics and reports to work on. Customer segmentation is made as simple as it can be.

2. Loyal customers spend more

Statistically, repeat customers tend to spend more on your products than new customers. Due to their familiarity with your organization and the comfort level that they share with you, they do not feel uneasy when making a repeat purchase. You do not need to tell them how good your product is as they have already tried it. If the perceived quality of service offered is greater than the customers’ expectations of the service, the customer is said to be satisfied and is likely to transact with you again in the future.

They are also more inclined to try new products launched by you, primarily because they trust you already. 

3. Free of cost marketing

The best way to market your product is to have real-life examples of users who are standing up for you and your organization. There is nothing quite like word-of-mouth marketing. So, if you satisfy one consumer, rest assured that they will recommend your products to their friends and family, leading to higher sales for you.

Once you have access to these new leads, you can concentrate your marketing efforts towards them by using various channels available like Direct Marketing through Emails (give particular attention to your Open Rates), SMS, Push Notifications, Social Media Ads, Google and YouTube Ads to turn these into customers.

These people become free promoters of your brand. Calculate your Net Promoters Score to see how many customers will actually do that for you.

Don’t you trust recommendations from friends and family? 

4. It helps you gain feedback 

Consumers who do not care for your product and do not come back to you for more are highly unlikely to provide feedback.

Even the customers offering negative feedback for your product or brand are doing you a favor- they are making the effort to tell you what you need to improve. Mostly, consumers who did not have a delightful experience in their first interaction with your brand respond by simply not buying from you again. Consumers who are convinced that what you offer is quality material will not hesitate to provide feedback. Customer retention is all about listening to what your buyers want. 

5. Leveraging on Customer Lifetime Value (CLV)

Customer Lifetime Value basically defines the value of a customer throughout their relationship with your company. Marketing efforts are not inclined towards a single transaction from prospects these days. Companies want a bigger share of their disposable incomes and they want it frequently. This leads to making marketing efforts more relationship-oriented. Customer Relationship Management is a very upcoming field with companies spending more time and resources on related activities. Therefore, it becomes vital to keep in touch with customers post purchase and study their behavior in order to convince them to simply do more business with you.


Poor customer service, a difficult purchase process, and a general lack of satisfaction when it comes to the products purchased are only a few of the reasons why customers choose to leave an organization. Higher customer retention means that you have addressed these reasons and have worked towards building a lasting relationship with your customers. With ShopAgain, this becomes easier. Try it out here