The confusion
Ask five Shopify merchants what "returning customer rate" means and you'll get five different answers. Some treat it as a synonym for repeat purchase rate. Others think it means traffic from existing customers. Shopify's own admin shows a "returning customer rate" metric that means something else entirely.
Let's make this clear.
The two metrics, side by side
Repeat purchase rate
Of all customers in a time window, what percentage placed more than one order?
Denominator: total unique customers
Counts: customers who ordered 2+ times
Returning customer rate
Of all orders in a time period, what percentage came from someone who had ordered before?
Denominator: total orders (or sessions)
Counts: orders from non-first-time buyers
Same store, same data — completely different numbers.
An example that shows the gap
Imagine a store with 1,000 customers in the past year. 200 of them placed more than one order. Those 200 repeat customers placed 600 orders total. Including first-time buyers, the store processed 1,400 orders in total.
| Metric | Calculation | Result |
|---|---|---|
| Repeat purchase rate | 200 repeat customers ÷ 1,000 total customers | 20% |
| Returning customer rate (order-based) | 600 repeat orders ÷ 1,400 total orders | 42.9% |
The store's repeat purchase rate is 20%. Its returning customer rate is nearly 43%. Same data, more than double the number. This is how merchants accidentally overestimate (or underestimate) their retention.
Shopify's Analytics → Reports → "Sales by customer" shows a "returning vs first-time" split that uses the order-level definition. If you compare that number to a benchmark article that uses the customer-level formula, you'll think you're outperforming when you might not be.
Which one should you track?
Both — but for different reasons.
Track repeat purchase rate for retention health
This tells you what percentage of your customer base comes back at all. It's the best indicator of whether your product and post-purchase experience are working. If this number is flat or declining month over month, you have a retention problem — regardless of how much revenue those few loyal customers generate.
Track returning customer rate for revenue composition
This tells you how dependent your revenue is on existing customers vs new ones. A high returning customer rate means your revenue is concentrated among repeat buyers. That's great for margins, but dangerous if you stop acquiring new customers — your revenue pool isn't growing.
A healthy store has a rising repeat purchase rate (more customers come back over time) and a balanced returning customer rate (repeat buyers drive 30–50% of orders, while new customer acquisition stays healthy).
There's a third term too: customer retention rate
Just to complicate things further, "customer retention rate" is yet another metric. It measures what percentage of customers from a specific cohort (say, everyone acquired in March) placed at least one more order within a time window.
Retention Rate = ((Customers at end − New customers) ÷ Customers at start) × 100
This is the most precise of the three because it controls for when customers were acquired. A cohort-based view prevents new customer acquisition from diluting your retention picture. Our free retention report includes a cohort heatmap that shows this visually.
How to avoid apples-to-oranges comparisons
Whenever you see a retention benchmark or compare your store to another, check three things:
- What's the denominator? — Customers or orders? The label "returning customer rate" and "repeat purchase rate" are used interchangeably online, so you have to look at the formula, not the name.
- What's the time window? — 90 days, 12 months, all-time? A store with 3 years of data will show a higher all-time repeat rate than a store with 6 months, simply because there was more time for people to come back.
- Is it calendar or rolling? — "Q3 2025 repeat rate" vs "last 365 days" can produce different answers depending on seasonality and order timing.
If the article or tool doesn't specify all three, the number is unreliable for comparison.
The bottom line
Repeat purchase rate tells you about your customers. Returning customer rate tells you about your revenue. They're both useful, but they answer different questions. Mixing them up — or comparing one to a benchmark that uses the other — gives you a false picture of how your retention actually stands.
When someone asks "what's your repeat rate?" — always ask back: "customer-level or order-level?"