If you’ve heard it once, you’ve probably heard it a hundred times: it’s far cheaper to encourage existing customers to buy again than to acquire new ones. Even a small increase in repeat purchases can have a big impact on your profit margins. In fact, a 2020 study on customer retention strategies found that 80% of a company’s future profits come from just 20% of its existing customers.

In today’s crowded ecommerce landscape, customer loyalty is more important than ever. With the cost of acquiring new customers steadily rising, keeping your current customers engaged isn’t just smart—it’s essential.

A well-designed customer retention strategy can turn casual buyers into loyal brand advocates, sparking a cycle of repeat purchases and long-term loyalty. Below, we’ll explore how to build a strong retention strategy and why it’s key to your business’s lasting success.

What is Customer Retention?

Customer retention is the practice of keeping existing customers engaged and encouraging them to make repeat purchases. The goal of effective customer retention strategies is to boost customer satisfaction, increase lifetime value, and prevent clients from turning to competitors. By focusing on retention, businesses can maximize the value of each customer while building long-term loyalty.

Why is Customer Retention Important?

Focusing on customer retention delivers multiple benefits for your business:

Higher Average Order Value

A strong customer retention rate reflects the trust customers have in your products and brand. This trust often leads to higher average order values, as loyal customers are more likely to buy additional items or upgrade to premium products. According to a Bain & Company study, the longer a customer maintains a relationship with an online retailer, the more they spend over time. For example, in the apparel sector, the average repeat customer spent 67% more in months 31–36 of their shopping relationship compared to the first six months.

Word-of-Mouth Marketing

Satisfied, loyal customers are more likely to recommend your business to friends and family. This type of word-of-mouth marketing is incredibly valuable, bringing in new customers through trusted recommendations instead of costly advertising. Many experts still consider word of mouth one of the most effective marketing strategies, and your long-term customers often become your most passionate brand ambassadors.

Cost Efficiency

Attracting new customers through marketing, advertising, and sales campaigns typically costs more than maintaining relationships with existing ones. By prioritizing customer retention, businesses can lower customer acquisition costs and boost profitability.

For example, consider a scenario where each store has 100 customers purchasing a $10 item each month. The store retaining 5% of customers monthly grows steadily, but a store retaining 10% experiences much faster growth. This illustrates how even a small increase in retention can create growth that’s difficult to achieve through acquisition alone.

14 Customer Retention Strategies That Actually Work

Use these 14 proven strategies as inspiration to boost customer retention and turn one-time buyers into loyal, repeat customers.

Use Customer Accounts

Customer accounts make repurchasing effortless by giving shoppers instant access to previous orders, pre-filled shipping information, and personalized experiences. These small conveniences encourage repeat purchases and enhance the overall shopping experience.

However, customer accounts can also be intimidating for new buyers, who may see creating one as too much of a commitment. Many prefer to check out as guests. A smart approach is to offer account creation after the first purchase. Once customers have experienced your products and services, they’re far more likely to create an account.

Thanks to modern technology, there’s no reason not to personalize the purchasing experience for every client.

Dean Lee, Head of Marketing at Sealions

With email automation, this strategy requires minimal effort. A well-timed, personalized email can highlight the perks of having an account, such as faster checkout, order tracking, and exclusive offers.

To further boost sign-ups, consider offering incentives like discounts on their next purchase, access to exclusive sales, or loyalty points. By providing real value, you increase the likelihood that customers will take the time to set up an account.

Improve Your Customer Service

A strong customer service system allows you—or a customer success representative—to address customer needs clearly, efficiently, and personally.

Tools like live chat or a help desk can transform a simple question into a sale. For example, Shopify Inbox lets you offer live chat directly on your website, with AI capabilities that provide instant answers and allow customers to communicate seamlessly from their computer or phone.

These direct interactions are excellent opportunities to stand out from the competition. Small touches, like a handwritten thank-you note or a complimentary gift, can turn a standard customer service experience into a memorable one, fostering loyalty and repeat business.

Start a Customer Loyalty Program

Customer loyalty programs—also known as customer retention programs—work because they encourage shoppers to purchase more frequently in exchange for valuable rewards. This creates a win-win: customers gain more value with each purchase, and your business benefits from their repeat business.

For example, Nerdy Nuts rewards customers every time they make an online purchase, keeping them engaged and coming back.

To get started, consider giving customers welcome points when they create an account. Once they see how easy it is to earn rewards, they’ll be motivated to return and shop again.

Loyalty programs can be simple—reward customers on their second purchase or when they reach a spending milestone. With Shopify analytics, it’s easy to identify your most loyal customers based on order frequency and total spend. You can also use automated loyalty apps to reward customers for the actions they take in your store, making the process seamless for both you and your shoppers.

Send Engaging Emails

Email marketing is a powerful tool for building and strengthening customer relationships, both before and after a purchase. Every message you send should add real value—otherwise, you risk losing customer engagement.

A great way to start is with follow-up emails. For instance, a week after a customer’s first purchase, send a message saying, “Thank you for your purchase.” This simple acknowledgment shows that you appreciate their business and care about their satisfaction.

To make the email even more impactful, suggest complementary products that enhance their initial purchase. This not only helps customers discover additional items they may love but also improves their overall shopping experience, encouraging repeat purchases and long-term loyalty.

Offer a Discount or Credit to Encourage Returns

Sending a discount code for a customer’s next purchase is an effective way to boost customer retention.

To maximize impact, go beyond the standard 10% off—offering something like a 20% discount can be seen as an investment in encouraging repeat purchases. While overusing discounts can erode margins, strategically offering them as part of a retention strategy can drive loyalty without significantly affecting profits.

You can also experiment with store credits instead of percentage discounts. For example, a $10 credit toward any future purchase often feels more tangible and flexible to customers. Unlike percentage discounts, store credits can be applied to any order, making customers feel like they’re receiving a bonus or gift rather than just a discount.

For instance, Harney & Sons Fine Teas emails existing customers a $10 credit to use on their next order, regardless of the items purchased, effectively encouraging repeat business.

Collect Customer Feedback

Using customer segmentation, you can identify shoppers who haven’t made a purchase in over three months and send them targeted customer surveys.

For example, if 60% of one-time buyers report they didn’t return because they haven’t used their previous purchase, you can engage them with an email marketing series focused on product education. Walk them through the product’s use cases, highlight its benefits, and share testimonials from other customers. This approach not only encourages repeat purchases but also strengthens customer relationships by providing helpful guidance.

Perfect the Returns Process

A smooth returns experience can turn one-time buyers into loyal customers, while a frustrating process may drive them away.

Start by creating a clear return policy that specifies what qualifies for a return and what doesn’t. With 67% of shoppers checking return policies before placing an order, transparent guidelines help set expectations and prevent misunderstandings.

Consider using platforms like Loop Returns or AfterShip to streamline the process. These tools allow customers to generate shipping labels, track returns, and request exchanges—all without burdening your support team—making returns hassle-free and encouraging repeat purchases.

Offer a Subscription Service

Subscription services encourage customers to purchase regularly, providing your business with steady, recurring revenue while keeping shoppers engaged. This model also enhances customer loyalty by offering convenience and consistent value.

You don’t need to make subscriptions your entire business model to see results. Consider offering a standalone subscription box with miniature versions of your best-selling products. This allows customers to sample a variety of items regularly, boosting engagement and increasing the likelihood of repeat purchases.

Turn Customer Complaints into Resolutions

Mistakes happen along the customer journey—shipments can be delayed, products damaged in transit, or the wrong items delivered. Owning these errors, even if your brand isn’t directly at fault, can transform unhappy customers into loyal ones through exceptional customer service.

This approach leverages the service recovery paradox, which shows that effectively resolving a mistake can build more goodwill than if the issue had never occurred.

We’re all human, and admitting mistakes isn’t always fun. But when it happens, apologize sincerely, take ownership, and communicate how you’ll make it right or prevent it from happening again.

Kurt Ellis, President of GLF E-Commerce Fulfillment

For example, if a customer receives a damaged order, take responsibility—even if the courier is at fault. Offer a sincere apology, ship a free replacement, and explain the steps you’re taking to prevent similar issues.

Customer Relationship Management (CRM) tools can help streamline these interactions. Tools like Endear, Reamaze, and Richpanel integrate with Shopify, providing real-time customer data to manage complaints efficiently and turn them into opportunities for loyalty.

Reward Referrals

Encouraging existing customers to refer friends and family is a powerful way to grow your customer base while rewarding loyalty. When a customer recommends your business, they’re vouching for your quality and reliability—trust that can significantly influence new buyers.

Launching a referral program lets you create a dual-reward system, where both the referrer and the new customer receive benefits. This not only incentivizes referrals but also strengthens relationships with your most loyal customers.

Be Vocal About Your Values

Today’s customers are more likely to support brands that share their values. By being transparent about your company’s mission, core values, and social responsibility initiatives, you can build stronger connections with your audience and inspire long-term loyalty.

Offer Buy Now, Pay Later Options

Providing flexible payment options like Buy Now, Pay Later (BNPL) can boost customer retention by making purchases easier and more accessible. BNPL allows customers to buy items and pay over time, often with low fees or no interest.

Make sure to highlight BNPL availability on product pages and during checkout. This flexibility reduces the financial burden on customers, increasing the likelihood they’ll complete their purchase and return for future orders. It also broadens your audience, attracting shoppers who may not have immediate funds available.

Gamify the Customer Experience

Gamification can make the shopping experience more engaging and enjoyable, encouraging repeat visits and purchases. Incorporate game-like elements such as reward points, badges, levels, and leaderboards throughout the customer journey. By making interactions interactive and rewarding, you can boost customer engagement and foster long-term loyalty.

Educate Your Existing Customers

Keep your existing customers informed through newsletters, blog posts, and social media updates about new products, services, and promotions. Educational content—like how-to guides, tutorials, and product tips—helps customers get the most from their purchases and strengthens their connection to your brand.

Hosting webinars or live Q&A sessions is another effective way to engage customers and answer their questions in real time. Consider audience segmentation to deliver personalized content tailored to their interests and past purchases, enhancing both engagement and loyalty.

Customer Retention Rate Metrics that Matter

Here are the most important customer retention metrics and why they matter for tracking loyalty, repeat purchases, and overall business growth.

Repeat Customer Rate

The repeat customer rate measures the percentage of customers who make a second purchase from your store. A higher rate indicates that customers are more likely to return, reflecting stronger loyalty and satisfaction.

Calculating your repeat customer rate is straightforward and requires just two pieces of information:

1. Number of customers with more than one purchase – the count of customers who made multiple purchases within a specific time period.
2. Number of unique customers – the total number of different customers who purchased from your store in the same time frame, including first-time buyers.

The formula looks like this:

Repeat Customer Rate = (Customers with More Than One Purchase ÷ Unique Customers) × 100

This gives you the repeat customer rate as a percentage, helping you track and improve customer loyalty over time.

Purchase Frequency

Purchase frequency measures how often customers return to buy from your store. This metric is crucial, as repeat customers often account for a significant portion of your annual revenue.

Calculating purchase frequency is similar to measuring repeat customer rate. Using the same time frame (e.g., one month), divide your store’s total number of orders by the number of unique customers.

The formula looks like this:

Purchase Frequency = Total Orders ÷ Unique Customers

Tracking purchase frequency helps you understand buying patterns and identify opportunities to encourage more repeat purchases.

Average Order Value

After tracking repeat purchase rate and purchase frequency, the next step is maximizing the value of each transaction. This metric, known as average order value (AOV), measures the amount of money a customer spends per order in your store.

Using the same time frame as your repeat purchase rate, divide your total revenue by the number of orders processed. Many platforms, like Shopify, calculate this automatically for you.

The formula looks like this:

Average Order Value = Total Revenue ÷ Orders Placed

Monitoring AOV helps you identify opportunities to increase sales per transaction, improving overall revenue and customer lifetime value.

Customer Lifetime Value

Whether you aim to improve retention metrics individually or together, the ultimate goal of retention marketing is to increase customer value. Customer lifetime value (CLV) is the key metric for understanding how much each customer relationship is truly worth over time.

To calculate CLV, multiply the average value of a sale, the number of repeat transactions, and the average retention time of a customer:

CLV = (Average Sale Value) × (Number of Repeat Transactions) × (Average Retention Time in Months or Years)

Tracking CLV helps you make informed decisions about marketing, promotions, and customer retention strategies to maximize long-term profitability.

Churn Rate

Customer churn rate measures the percentage of customers who stop doing business with you during a specific time period. Several factors can cause your churn rate to rise, including:

• Unmet expectations
• Better competitor offerings
• Lack of engagement
• Poor customer service

The goal is to keep churn as low as possible. The first step is calculating your current churn rate so you can identify areas for improvement and implement strategies to retain more customers.

Customer Retention Examples

Everlywell

Everlywell keeps its customers engaged by sending personalized emails highlighting new products and special promotions. By recommending complementary products and inviting first-time buyers to upcoming sales, the brand effectively maintains engagement and encourages repeat purchases.

Luxy Hair

Luxy Hair notes in its FAQ that hair extensions typically last three to six months, or up to a year depending on usage. Leveraging this, Luxy could implement a series of automated emails at the three-month, six-month, and one-year marks to highlight the benefits of a fresh set of extensions.

These emails educate first-time buyers, keep Luxy top of mind, and encourage repeat purchases, all while delivering a seamless and valuable customer experience.

In all post-sale marketing communications, remind customers why they chose your brand in the first place. Encouraging repeat purchases depends on showing them the value and benefits of making another purchase.

Dia & Co

Dia & Co is a clothing brand focused on plus-size fashion. After launching its latest referral program, the brand saw its referral links shared over 50,000 times. Forty thousand customers participated, and the program achieved approximately 22 conversions per day in its first month.

This example highlights how an effective referral program can drive customer engagement and encourage repeat business while expanding your customer base.

Pepper

Pepper helps women find their ideal bra size through a quick 45-second fit quiz, which generates personalized product recommendations. This process not only simplifies the shopping experience, boosting customer acquisition, but also ensures shoppers receive items tailored to their needs and preferences. By delivering the perfect fit, Pepper encourages repeat purchases and fosters long-term customer loyalty.

West Path

West Path, an ethically sourced clothing brand founded by surfers in San Diego, adds a personal touch to every order with a complimentary West Path sticker. This small, unexpected gesture costs just a few cents, delights customers, and creates a memorable unboxing experience.

Chubbies

A return management system streamlines the entire returns process for customers. It allows shoppers to initiate returns while giving you the tools to track returns, restock inventory, and monitor financial impact.

Chubbies, an online men’s clothing retailer, exemplifies this with its free returns policy—offering free exchanges within 90 days and full refunds within 30 days of purchase. Customers can easily start a return by entering their order number along with a shipping ZIP code, email, or phone number into an online form, making the process smooth and hassle-free.

Elph Ceramics

Elph Ceramics operates both an online store and brick-and-mortar locations. Managing customer data across these channels was challenging, so the brand implemented Shopify POS to create seamless customer experiences across all touchpoints.

With unified customer data—including emails and purchase history—Elph Ceramics can now send targeted retention emails that encourage repeat purchases. The results speak for themselves: a 25% growth in its customer database and a 30% increase in customer retention rate.

Splash Wines

The Black Friday Cyber Monday (BFCM) weekend is one of the busiest shopping periods of the year. Instead of focusing solely on customer acquisition, Splash Wines entered the event with a customer retention strategy in place. “We have customers reorder about 40% of the time, and they reorder an average of five or six times with us, so it’s a very strong point of pride for us as a company,” said CMO Garrett Imeson.

Splash Wines leveraged Recharge to create a subscription model that allowed BFCM customers to lock in discounted prices throughout the holiday season. Using historical purchase data, the brand scheduled subscription-related email campaigns around key order dates, such as when customers typically finish their first bottle of wine.

This approach resulted in a 177% year-over-year increase in Cyber Weekend sales, with 40% of customers making repeat purchases.

The Honest Kitchen

The Honest Kitchen already had a customer loyalty and subscription program in place, but existing customers couldn’t redeem points on subscription orders.

Because its target market views the products as an investment in their pets’ health, The Honest Kitchen emphasizes continuous customer education, even after a purchase. Using Yotpo, the brand delivers personalized educational content tailored to each pet’s type, weight, and dietary needs. It also automatically updates a rewards page based on customers’ previous purchases.

This personalized approach boosted referral program opt-in rates to four times the industry average. “I’ve definitely seen customers who are inclined to explore new products, because there’s less of a risk if they’re using reward points,” says Leanne Pratt, digital marketing and ecommerce manager.

Jill & Ally

Jill & Ally leverages its Crystal Candle Club to encourage customers to make multiple purchases. Generous discounts increase with subscription frequency, motivating first-time buyers to return. Subscribers also enjoy early access to new products, exclusive sales, and surprise items.

Once enrolled, customers authorize Jill & Ally to charge their payment card according to their chosen subscription schedule. Managing subscriptions—pausing or canceling—requires signing into their account, making customer retention the default and effortless.

Mack Weldon

Mack Weldon encourages customer feedback through an automated post-purchase email. The email prominently features the purchased item with a “click to rate” widget, making it easy for customers to leave a review.

It also includes a personalized product carousel showcasing similar items other customers bought, along with their star ratings. This approach not only reinforces the positive experience of the initial purchase but also encourages repeat purchases by highlighting products that may interest satisfied buyers.

By collecting feedback and delivering personalized product recommendations based on previous purchases, Mack Weldon strengthens customer engagement and drives long-term loyalty.

When to Focus on Customer Retention

The customer retention strategies you prioritize depend largely on the products you sell. A retailer offering high-end leather furniture will approach retention differently than a store selling tea and coffee. Businesses with high-value, frequently purchased items benefit the most from a robust retention strategy, as these customers often have the highest lifetime value.

Your store’s lifecycle stage also plays a key role in determining whether to focus more on customer acquisition or retention. Here’s a guide to help you prioritize retention efforts based on your business’s maturity:

• Just starting: In the early stages, focus on acquiring new customers. Acquisition efforts should take precedence so you can rapidly grow your customer base.
• Gaining traction: With a few loyal customers and sporadic sales, start incorporating retention tactics, beginning with automated email campaigns.
• Growing consistently: As sales stabilize, integrate retention strategies with acquisition efforts. Consider launching referral and loyalty programs.
• Established: While acquisition may generate one-time purchases, a strong retention strategy increases purchase frequency, boosting customer lifetime value. Be deliberate in your retention efforts.
• Well-established: After overcoming initial growth challenges, focus heavily on retention. With processes and automations in place, prioritize strategies that deepen customer loyalty and encourage repeat business.

Always tailor your retention strategy to your products and your customers’ behavior. Ensure that your efforts align with your business model and meet the specific needs and expectations of your audience.

Customer Retention Strategies FAQ

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What is a good customer retention rate?
For ecommerce brands, a good customer retention rate is typically around 30%.

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What are the key factors in customer retention?
The main factors for boosting customer retention include:

• Customer satisfaction: Deliver high-quality products, positive experiences, and act on feedback.
• Customer service: Offer prompt, friendly, and helpful support while keeping customers informed.
• Personalization: Tailor experiences to individual preferences.
• Loyalty programs: Reward repeat customers with points, discounts, or exclusive offers.
• Engagement: Build a sense of community around your brand.
• Convenience: Simplify the customer journey with easy-to-use processes.
• Value: Offer strong benefits and competitive pricing.

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How do you improve customer retention?
Start by establishing a baseline: determine how many of your customers are returning. Then implement retention tactics such as smooth onboarding, loyalty incentives, personalized communications, and exceptional customer service to keep customers happy and coming back.

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How do you measure customer retention?
Calculate your customer retention rate by taking the number of customers who made repeat purchases in a specific period, subtracting the number of new customers acquired in that same period, dividing by the total number of customers at the start of the period, and multiplying by 100.

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What are examples of customer retention strategies?
Effective strategies include:

• Offering discounts or store credits to returning customers
• Running targeted email marketing campaigns
• Encouraging customers to join a subscription program
• Creating a loyalty or rewards program
• Improving customer support to ensure a smooth experience

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