How do you calculate customer retention rate for an ecommerce brand?

Why does customer retention rate matter?

Because repeat customers pay for your growth. A subscription brand that keeps 90% of its subscribers each month would lose about 72% of them over a year if that rate held, so each subscriber you pay to acquire earns back less before they leave. Retention rate shows how much of your customer base carries into the next period, and it is the number Everboost works to raise.

Calculate your customer retention rate

Choose how your customers buy. Every field starts empty, and the note under each one says where the number usually comes from.

The rate is only meaningful with its period. A monthly and a yearly retention rate of 90% describe very different businesses.

What is customer retention rate?

Customer retention rate is the share of the customers you had at the start of a period who are still customers at the end of it. Customer retention rate = (customers at the end - new customers in the period) / customers at the start, x 100. New customers are taken out so that growth from acquisition does not hide the customers you lost. Churn rate is the other side: 100% minus retention rate.

How do you calculate customer retention rate?

For subscriptions, use the standard formula on active subscriber counts. Worked example for one month:

Step	Calculation	Result
Active subscribers on 1 October		2,000
Active subscribers on 31 October		2,100
New subscribers in October		300
Subscribers kept	2,100 - 300	1,800
Monthly retention rate	1,800 / 2,000	90%
Monthly churn rate	100% - 90%	10%
Left after 12 months at that rate	0.9 to the power of 12	about 28%

Two details keep the number honest. Count reactivated subscribers as new, or more subscribers can look kept than you started with; a starting subscriber who cancels and comes back within the same period is already in the 2,000, so do not count them as new. And new subscribers who joined and cancelled within the same month are in the 300 but not in the 2,100, so the formula reads slightly low when that happens; if your subscription app can count how many of the 2,000 starting subscribers are still active on the last day, divide that by 2,000 instead.

For a brand where customers buy one order at a time, there is no list of active customers to count at the start and end. Measure the share of one period’s customers who bought again in the next:

Step	Calculation	Result
Customers with an order in 2024		10,000
Of those, customers with an order in 2025		1,600
Year-on-year retention rate	1,600 / 10,000	16%

Keep the period the same length on both sides, and use 12 months if you can, so each season is covered once. Everboost measures one-order-at-a-time retention this way because it uses the brand’s own order history, and the period length sets the cut-off for when a customer counts as gone.

The earlier period mixes first-time and returning buyers, and first-time buyers come back far less often, so a year of heavy acquisition lowers the rate without any change in loyalty. Split new and returning customers from the earlier period to see why the rate moved. Leave refunded, cancelled, free sample and influencer orders out of both periods, and merge duplicate customer records from guest checkouts or changed email addresses.

What does a monthly retention rate mean over a year?

Monthly rates multiply. Keeping 90% each month sounds strong, but after 12 months it leaves about 28% of the starting group.

Monthly retention	Monthly churn	Left after 12 months
97%	3%	about 69%
95%	5%	about 54%
93%	7%	about 42%
90%	10%	about 28%
85%	15%	about 14%

The table assumes the same churn rate every month. Real churn is higher in a subscriber’s first few orders and lower later, so a new cohort usually ends the year below the table and a long-standing base above it. Treat it as a way to read a monthly rate, not a forecast.

This is why a few points of monthly churn matter: at 7%, a typical figure in our DTC subscription churn benchmarks, about 42% of a cohort is left after a year; at 5%, about 54%.

What is a good customer retention rate?

For DTC subscriptions, published sources put a typical brand at 5 to 10% monthly churn (Subbly’s 2024 median across all merchants and models is 7.44%), so 90 to 95% monthly retention; our churn benchmarks guide lists the sources and what each one measures.

For brands selling one order at a time, the closest published figure we found is a 2026 study by the analytics app By the Numbers. Across 1,284 Shopify stores, measured the same way as the calculator above (customers from October 2024 to September 2025 who ordered again in the following 12 months), the median was 15.8% and the top quarter was above 25.3%. Consumables such as skincare and coffee sat higher than furniture or shoes. The stores all use that app, so treat it as a reference point and compare with your own earlier periods first. Retention figures from software, B2B and service businesses on contracts rarely transfer to DTC.

What is the difference between retention rate, churn rate and repeat purchase rate?

Metric	What it measures	Best for
Retention rate	Share of a period’s customers still active or buying in the next	Subscriptions, year-on-year customer bases
Churn rate	Share lost in the period, 100% minus retention	Subscriptions
Repeat purchase rate	Share of customers who placed a second order, ever or within a window	One-order-at-a-time brands

Our guide to a good repeat purchase rate covers the second-order side. Retention rate adds what happens after that: whether customers keep buying, period after period.

How do you improve customer retention rate?

1. Measure it by cohort. A blended rate mixes loyal, long-standing customers with new ones who leave fastest. Retention by month of first order shows where the losses are.
2. Work on the early orders. In our analysis of 39,766 cancellation events across nine DTC replenishment brands, 78% came by the third completed order, so the first two or three orders decide much of the curve. Our churn benchmarks have the detail.
3. Separate the reasons people leave. Failed payments, too much product and price need different fixes, from payment recovery to easier skips and swaps.
4. Get the second order. For one-off buyers, coming back is the gate: a customer who never places a second order cannot be retained. Timely reminders, product education and a first-order subscribe offer all help.

To see what this looked like for one brand, read the Salt Grooming case study, where customers buying again the following year were up 13%. If you want a retention agency to find where your customers are leaving and what keeping more of them is worth, book an intro call.