Editor: Deepa Bagga

Marketing Tips


As a retailer, you should measure the success of your retention strategies. There are metrics that can help calculate whether you were able to boost profits through retention or not. Let's discuss the top 8 metrics that you should not ignore.

Have you ever thought to yourself that it is acceptable to lose a customer; we can always acquire the next one? No, right! Not even in your faintest dream do you want to lose a single customer.

However, the rising cost of acquisition combined with increased competition makes you stay awake into the night, finding ways to keep your customer.

Many business owners have started identifying the best ways to retain their customers. However, only a few have started measuring the effectiveness of their methods.

Measuring the success of retention strategies through the ideal metrics is very important. You need to align your retention metrics to the ultimate goals.

Which metrics should you be measuring? Here, we will take you through the top 8 metrics that you cannot avoid measuring. It will help you realize the impact of repeat customers on your business.

#1 Customer Churn Rate

This metric should top your list because it gives you an insight into the number of customers you lost.

Simply put, it is the percentage of customers that stopped coming to your store over a period of time. Their last purchase was months ago. For every retailer, focusing on a lost customer and getting them back is far more cost-efficient than winning a new customer. You already know quite a few things about this lost customer, and personalizing experiences can help you win them back.

The CRR should be low for your business to succeed and grow with repeat customers. You should focus on why your business is losing customers and work towards improving your retention strategies.

Note: It is crucial to observe the churn rate regularly to know how many customers your business tends to lose. A monthly check of this rate is ideal for retail business owners.

*Monthly churn rate= (Customers you had at the start of the month- customers you have at the end of the month/customers at the beginning of the month) 100

  • To reduce the churn rate, you need to encourage customers to visit your store. You can start with a robust loyalty program, educate them about the same, and have enticing rewards that encourage participation and repeat visits.
  • Apart from this, you will need to win back the customers that left your business. Re-activate them with a campaign or a personalized message that will make them want to come back
  • Work on in-store experiences and ensure you take a look at the feedback shared by the customer. Incorporate these points to create winning experiences

#2 Average Order Value

This metric will tell you how much the repeat customer spends at your store every time they visit.

In simple words, it tells you the value of every customer for your business. If your existing customers spend more money each time they visit your store, you can reduce your acquisition spend. As a result, you can focus your efforts and money on retaining the current customers and grow your business.

The average order value for your business = Total revenue/total number of orders

You will need to select the date range as per the period for which you are calculating the average order value.

E.g., If you are calculating for a month, you need to check the total revenue you managed to gain in a month.

The average order value is a must-check metric for every business. It lets you know where you can focus your efforts and helps you channel growth better.

You can use the following strategies to increase the average order value for your business:

  • Start with cross-selling; it works in the best possible way to increase the order value. For example, you can check their purchase history and recommend products that they can try.
  • Product Combos: This is an excellent way to increase the order value. Instead of just giving them a coffee, you can provide them with a combo of coffee and a sandwich. They are sure to pick it up. If you are a salon, you can offer a nail service with essential services
  • Loyalty Program: If you let your customers know that they can earn points every time they visit the store, they will spend more. The order value will also increase if the rewards are exciting for the customers.

#3 Purchase Frequency

For a store owner, the frequency of visits and purchases matters a lot. This metric takes a look at how often a customer purchases at your store. If the frequency is high, it adds up to your revenue. The higher the frequency, the more profits your store gains.

Purchase Frequency = Total Number of orders for the selected time/total Number of unique customers for the time chosen.

Make sure to add unique customers to the calculation so that you get the absolute value for your business.

You can improve your purchase frequency by encouraging the customers to keep coming back to your store. You can understand what makes them visit your store often by studying their purchase behavior. It will help you know what makes them come back.

Send personalized and relevant campaigns at the right time to these customers and engage them. Customers that are fond of your business would love to receive engagement messages from them. It would build that relationship that you can use to improve retention.

#4 Repeat Purchase Rate

This is the percentage value of all the customers who made a repeat purchase at your store. For retention, the repeat purchase rate for your store should be high. If your RPR is good, it means more people are visiting your store, and the retention techniques are working for your business.

RPR = Total Number of customers that made a repeat purchase in the selected period/total number of customers for your business during the period chosen.

To improve your repeat purchase rate, you need to keep introducing newness to your business. It could start with a robust loyalty program. Yes, a good and custom program can motivate repeat purchases. But, make sure to include rewards that entice your customers and make them come back more often.

You could use campaigns with a new product promotion or even discount deals to capture them.

You can also increase the rate with new additions to your business like a new product, online order convenience, etc.

#5 Time Between Purchases

What is the average time taken by your customer to revisit your store? This critical metric also helps you know your retention abilities and whether your strategies are working or not.

**Note: **This metric is dependent on purchase frequency for your store

**The time between purchases= The selected period (either a year or a month)/purchase frequency. **

Ideally, it would help if you calculated it yearly to understand the impact of this metric on your retention rate.

You can substantially improve this by offering them incentives or telling them how much you care by incorporating their feedback. The idea is to give them a deal or engage them in ways that will improve their experiences.

#6 Redemption Rate

This loyalty performance metric is equally crucial in measuring the success of your retention strategies. This metric helps you know how strong or effective your loyalty program is. If your RR is high, then your program is working towards making your business profitable.

Redemption Rate = Total Number of points redeemed/total Number of points issued

This rate should be relatively high if you want to maximize ROI through loyalty.

There are a few reasons why the redemption rate is low for your business:

  • Not many people are aware of the loyalty program
  • Some people have joined the program but are not redeeming the points
  • There aren’t enough points for redemption
  • The rewards are not exciting enough

It would help if you redefined your strategies at this point. You should also ensure that your cashier has enough knowledge about the loyalty program. They will be able to add more customers to the program and encourage participation.

#7 Customer Lifetime Value

This will help you decide the amount you should spend on acquiring a new customer. If your customer lifetime value is high, it means your retention strategies are working. As a result, you can reduce the cost of acquiring, as your repeat customer will help get more customers on board.

**Customer Lifetime Value = Customer value * store’s average lifespan. ** Where, Customer value = average order value * purchase frequency Store average lifespan= 1 to 3 years **Note: **You can also calculate the customer value for the specific segment.

#8 Loyal Customer Rate

This rate helps you know which customers are truly loyal to your brand. In addition, it helps you differentiate between repeat, new and inactive customers.

This rate helps you determine if you can work towards improving loyalty for your business. After all the defining strategies, were you able to retain more customers and create a loyal base for your business?

LCR = Number of customers who purchased 4+ times in 365 days/ number of unique customers for your business in 365 days.


When you track and measure these metrics, you will be able to judge how well your retention strategies are working for the business. It allows you complete understanding of your business retention abilities and can even help you reduce overall acquisition and other customer related costs. With frequent measurement, you will be able to maximize profits for your business and enhance ROI.