What is Customer Retention Rate? The Key to Sustainable Ecommerce Growth

Customer Retention Rate means the percentage of customers who continue to do business with you over a given time period.

For ecommerce and direct-to-consumer (DTC) brands, this metric reveals how effectively you convert one-time shoppers into repeat customers.

A high retention rate indicates stronger customer relationships. For ecommerce businesses, retention is crucial for sustainable growth. Many top brands now prioritize retention over acquisition, because of retention's clear impact on profit-led growth.

MobiLoud helps ecommerce brands build mobile apps that drive higher retention rates, with minimal effort and investment. Want to learn how? Start with a free preview of your app now.

Why Does Customer Retention Matter in Ecommerce?

Customer retention drives profitable growth and long-term business health.

Acquiring new customers is expensive; often 5× more costly than keeping existing ones.

Retention is cheap, and pays off at an outsized rate. Data shows a mere 5% increase in customer retention can lift revenues by 25%–95%.

This impact happens because loyal customers:

• Buy more often
• Spend more per order
• Are 50% more likely to try your new products
• Spend 31% more on average
• Often become brand ambassadors, referring others to your brand

Although repeat buyers might represent a minority of your total customers, they generate disproportionate value.

Gorgias found that repeat shoppers make up only 21% of the average brand's customers, but drive 44% of revenue.

Ecommerce leaders like Glossier and Allbirds understand this dynamic. These brands cultivated communities and emotional connections that keep customers engaged beyond the first sale. Their loyal customers provide valuable feedback, positive reviews, and buzz on social media.

Improving retention creates a virtuous cycle: more repeat sales, higher LTV, stronger loyalty, and less reliance on constant spending to get new customers.

Key Retention Benchmarks for Ecommerce

In ecommerce, customer retention rate is typically calculated as:

Retention Rate = ((# of customers at end of period – # acquired during period) ÷ # of customers at start of period) × 100%

For example, if you start the quarter with 1,000 customers and end with 900, having added 100 new customers in that time, your retention rate is (900–100)/1000 = 80%.

Many ecommerce brands also track Repeat Purchase Rate - the percentage of customers who make more than one purchase. This is often an easier way to track retention for non-subscription businesses.

Average retention rates in ecommerce are typically lower than other industries. Industry benchmarks are around 30%, meaning only about 3 in 10 customers return to buy again within the measured period.

Retention varies widely by vertical:

• Beauty & Cosmetics: ~26% average repeat purchase rate
• Fashion & Apparel: ~25% repeat rate
• Health & Supplements: ~29% repeat rate
• Grocery/Pet Supplies: often 50%+ (highest categories)
• Luxury Goods: as low as ~10% repeat within a year

These benchmarks highlight that "good" retention is context-dependent.

For a premium one-off product brand, a 20% repeat rate might be solid. However a daily-use product brand might aim for 50%+.

There is a direct link between retention and customer lifetime value. Higher retention causes higher LTV.

Studies show that after one purchase, there's only a 27% chance a customer will return. But once they make a third purchase, the chance of another jumps to 54%.

This shows the importance of the initial retention loop: getting a second and third purchase dramatically increases a customer's long-term value to the business.

How Do Ecommerce Apps Impact Retention?

Mobile apps are a strong tool for improving retention, as a dedicated channel to engage customers post-purchase.

Research finds app users are twice as likely to return to a store within 30 days compared to desktop shoppers. They also have higher conversion rates and bigger basket sizes due to the convenience and personalized experience an app provides.

Here's more on why ecommerce mobile apps contribute to increase retention:

Direct Communication via Push Notifications

Apps enable push notifications - a powerful way to stay in touch with customers in real time. You can send useful, timely nudges such as:

• Back-in-stock alerts
• Order status updates
• Flash sale announcements
• Personalized product recommendations
• Abandoned cart notifications

Push notifications have the potential to significantly increase repeat visits and purchases. The key is relevance and timing.

Many successful brands use push as a retention lever. For example, Gymshark's shopping app sends alerts for exclusive "app-only" product drops, tapping into customers' fear of missing out and driving repeat traffic.

You can see more examples of brands successful using push notifications in our ultimate guide.

In-App Loyalty Programs and Rewards

Mobile apps are an ideal home for your loyalty program, making it easy for customers to track and redeem rewards.

Brands can create a more gamified, engaging loyalty experience in-app:

• Customers earn points for each purchase
• They see progress toward the next tier or reward
• They receive notifications when rewards are available

This convenience and visibility boost participation. 83% of consumers say being part of a loyalty program influences their decision to buy again.

Personalized Shopping Experience

Apps can offer a level of personalization that's harder to achieve via the web alone.

By leveraging user data (browsing history, past purchases, preferences), the app can dynamically showcase tailored products and content.

Personalized offers and product suggestions make customers feel understood, valued. This directly influences retention. That's why 91% of consumers say they're more likely to shop with brands that provide relevant, personalized offers.

Ecommerce apps excel at this: they can greet users by name, remember sizes or saved items, and even use AI to curate "just for you" sections. The result is higher engagement and more frequent shopping, as the app becomes like a personal storefront for each customer.

A Frictionless User Experience

A great app makes the post-purchase and ongoing shopping experience fast and frictionless, which encourages loyalty.

Friction makes shopping frustrating. Frustration reduces loyalty, and makes shoppers search for alternatives.

A smooth UX (quick load times, one-click reorders, easy payment options, and saved shipping info) removes barriers to purchase.

When customers find an app convenient and enjoyable, it becomes their preferred way to shop your brand, naturally lifting retention.

Community and Content Integration

Ecommerce apps can go beyond transactions to build a community around the brand. Some innovative DTC brands are embedding community features or content feeds in their apps to increase engagement.

An example is Gymshark launching the Gymshark Training app, which provides workout ideas and connects users in a fitness community, as a complement to Gymshark's shopping app.

Beauty brands often integrate content like tutorials, blog posts, or customer looks into their apps. This gives customers reasons to open the app even when they're not immediately buying something, keeping them engaged for longer.

Over time, this deeper engagement leads to higher retention because customers feel part of a like-minded tribe.

What Strategies Improve Customer Retention?

Here are some ways to actively drive higher customer retention for DTC brands.

Deliver Outstanding Customer Service

Customer retention starts with customer satisfaction. Ensure your support is responsive and helpful across all channels - app chat, email, social, etc.

Fast and friendly customer service significantly boosts repeat business. Gartner research found that when customers feel they received great service, there's an 82% probability of buying again.

Train your team (or chatbot/AI assistants) to resolve issues quickly. A smooth return process can turn a potentially negative experience into a loyalty-building moment.

43% of customers will stop buying from a brand after a single bad experience. So preventing those missteps is key.

Implement a Loyalty or VIP Program

Launch a loyalty program to reward repeat customers.

This doesn't have to be complex. Even a simple point-per-dollar and coupon reward system can work as a quick win.

The goal is to give customers a tangible incentive to choose you again. Loyalty programs both increase repeat purchase rates, as well as fostering emotional ties to the brand.

Consider tiered VIP levels (e.g., Bronze, Silver, Gold) to encourage progression. Brands with well-run loyalty programs see 15–25% higher annual revenue from their loyal customers.

Use Personalization and Segmentation

Avoid blasting the same message to everyone. Segment your customers and personalize communications to their behavior and preferences.

At a basic level, separate your one-time buyers from your repeat customers and communicate differently to each:

• New customers might get a "welcome" series with a first-repeat-purchase discount
• Loyal customers might get a "VIP sneak peek" of upcoming launches

In your app, use segmentation for push notifications: if a segment of customers only buys skincare, send them skincare content, not generic promos.

Done right, personalization shows customers you understand them, increasing their affinity for your brand.

Streamline the Reorder Experience

Make it as easy as possible for customers to buy from you again.

Eliminate friction in the reordering process by:

• Adding "Buy Again" or "Reorder" buttons in your app
• Sending replenishment reminders for consumable products
• Offering subscribe-and-save options for eligible products
• Optimizing your checkout flow for speed, especially on mobile
• Enabling one-click checkout options

The less hassle a customer faces, the more likely they'll come back rather than drift to a competitor.

Engage Customers with Content and Community

Building a sense of community can significantly improve retention, as customers feel they're part of something bigger than a transaction.

Glossier famously built its brand on community engagement starting with its Into The Gloss blog, and now a fervent social community, which keeps fans emotionally invested.

You can do the same by creating content that resonates with your audience's lifestyle or values:

• Publish styling tips if you're a fashion brand
• Host live Q&As or how-to videos in your app
• Create a forum for customers to share and discuss

Brand-run communities can turn customers into loyal fans who stick around for the community and identity, as much as the product.

Solicit Feedback and Act on It

Show customers that their voice matters. After the sale, ask for feedback through brief surveys or in-app prompts.

Not only can this uncover issues to fix (preventing silent churn), but closing the feedback loop makes customers feel heard.

Smart DTC brands use customer feedback in product development. This approach signals that you value the customer beyond their dollars, building loyalty.

Additionally, reach out to lapsed customers to understand why they haven't come back. A friendly "we miss you" email (or push notification) with a small incentive can both win them back and reveal pain points.

Align Retention Tactics with Your Brand Identity

Make sure your retention tactics feel authentic to your brand. A common pitfall is copying generic tactics that don't fit your brand's ethos.

For example, if your brand is positioned on luxury and exclusivity, blasting big coupon codes might undermine that premium image.

Instead, focus on white-glove service and exclusive access as retention rewards.

Brand consistency matters. Retention efforts should enhance the customer's connection to your brand story, not contradict it.

Learn more: Read how Country Life Natural Foods uses their mobile app to massage buyers along the path to becoming long-term, engaged buyers who stick around for life.

Common Retention Pitfalls to Avoid

Here are some of the ways brands commonly go wrong when trying to grow retention.

Over-Communication and Notification Fatigue

Bombarding customers with constant emails, texts, or push alerts can annoy them into quitting on you.

There's a fine line between being engaging and being spammy.

Quality over quantity is key - a few well-timed, relevant touches beat a barrage of noise. Monitor unsubscribe rates and app notification opt-outs as warning signs.

Lack of Segmentation (One-Size-Fits-All)

Treating all customers the same will hurt your retention efforts. A new customer has different needs than a 5-time buyer.

Blasting the same offer to everyone reduces effectiveness, and feels impersonal or irrelevant. Avoid this pitfall by using even basic segmentation: by purchase history, demographics, or engagement level.

Segmentation and relevance are the antidotes to attrition. Customers stick around when the experience speaks to them.

Misaligned Retention Incentives

Ensure your retention tactics don't inadvertently train customers to behave in ways that hurt your business. A classic example is over-reliance on discounts.

If every communication includes 20% off, customers might learn to never buy at full price.

Design your loyalty incentives to encourage the behaviors you do want (repeat purchases, referrals, higher basket sizes) and cap or exclude things that could be gamed.

Keep your program simple and aligned with value for both the customer and you. The best retention strategies deepen the customer's connection to your brand's mission, not just its wallet.

Ignoring Churn Signals

Don't focus solely on happy repeat customers. Pay attention to those slipping away as well.

A pitfall is to pour all your resources into marketing campaigns without analyzing why customers churn.

Make sure someone on your team is actively reviewing churn metrics and qualitative feedback. Plug the leaks by addressing core issues: fix product problems, adjust pricing, or change your onboarding for better expectation-setting.

Set up win-back flows for lapsed customers. A friendly reminder or exclusive comeback offer can re-engage some of them.

What Are Some Quick Wins for High Retention ROI?

For teams with tight budgets or small staffs, focusing on a few high-impact, low-effort retention wins can deliver excellent ROI:

• Optimize your thank-you and follow-up: After a first purchase, send a warm thank-you email with a next purchase coupon or useful content. This simple gesture can gently nudge a second purchase.
• Re-engage with a "We Miss You" offer: Identify customers who haven't bought in 90 days and trigger a win-back message with a small discount or personalized note.
• Leverage Social Proof and Referrals: A referral program (e.g., "Give $10, Get $10") can be a quick add-on that not only brings new customers but also retains the referrer by rewarding them.
• Speed up your website/app: Improving page load times and reducing glitches in your app is an often overlooked retention win. A fast, easy shopping experience will quietly keep customers coming back.
• Double-down on best sellers & subscription options: Analyze which products have the highest repeat purchase rates and make those prominent. Consider offering these as subscriptions in-app with a small discount.

What's the Future of Retention?

Looking ahead, customer retention strategies are poised to become even more sophisticated:

AI and Predictive Analytics

Machine learning models can sift through customer data to predict churn before it happens, flagging which customers are at risk so you can stop them from churning.

The DTC hydration brand Hydrant used predictive AI to identify likely churners and target them with tailored offers, resulting in a 260% higher conversion rate and a 310% boost in revenue per customer.

Zero-Party Data Focus

In a privacy-conscious world, brands will lean heavily into zero-party data - information that customers proactively share with you, such as preferences or intentions.

Ecommerce apps will increasingly ask customers for this input through quizzes, style surveys, and wish lists. In return, brands will offer hyper-personalized experiences that keep customers loyal.

App-Native Communities

Gen Z and younger consumers are blending social interaction with shopping. Forward-thinking DTC brands may incorporate community feeds, user galleries, or live shopping events into their apps.

These community elements deepen engagement and give customers a reason to open the app even when they're not actively shopping, which leads to more frequent purchases over time.

Lifetime Relationship Emphasis

Retention strategies will increasingly emphasize lifetime customer relationships over single transactions. We might see metrics like "10-year customer value" or "customer advocacy index" gaining prominence.

More brands may launch membership programs that bundle perks, content, and community, creating a moat of benefits that make leaving undesirable.

Retention: The Engine Behind Sustainable Growth

Acquisition gets the headlines, but retention wins the long game. A small boost in how many customers stick around can massively impact revenue. Why? Because repeat buyers, while often a minority, drive the majority of profits.

As ecommerce evolves, one thing stays the same: keeping customers coming back is essential.

For founders and marketers, the opportunity is clear:

• Invest in customer experience.
• Communicate thoughtfully (not endlessly).
• Build real community.

Avoid cookie-cutter tactics. Personalization isn’t a nice-to-have - it’s the playbook. The brands that win treat customers like relationships, not receipts.

Mobile apps are proving to be retention goldmines. They offer what websites can’t - direct lines of communication, tailored experiences, and frictionless reordering.

You can launch your own mobile app now, for minimal effort and expense, just by converting what already works - your website.

Get a free preview now to see what's possible, or check out our homepage to learn more about how it works.