Snapshot Method Example
Posted: Sun Dec 22, 2024 9:38 am
Marketing Channels - This is the best way to measure your return on marketing investment. Possible channels include affiliates, referrals, organic, social, direct, or any other meaningful acquisition source for your store.
Product Categories - Segmenting by prod russian phone number list uct category allows you to see which products are most effective at creating loyalty and gives you the power to control for varying product lifecycles. Options include by brand, product lines, or more general product categories.
Demographics - Age, gender, and geographic areas can all reveal how your brand appeals to various groups of customers.
RFM Analysis - A more comprehensive eCommerce behavior segmentation based on past purchases across recency, frequency and monetary values.
2 Methods to Calculate eCommerce Customer Retention Rate
There are two primary ways eCommerce stores can measure customer retention rate.
Customer Retention Rate Method #1: Snapshot
The first method provides a more general view of how your store is retaining customers over a given period of time.
It uses three variables.
Customers Start - Number of customers at the start of a time period
Customers End - Number of customers at the end of a time period
Customers New - Number of customers acquired during the time period
The final equation looks like this:
(Customers End - Customers New) / Customers Start
I've labeled this approach the "snapshot" method because it gives you picture of your retention in one moment in time.
To illustrate, here is a simple customer retention rate example.
Let’s say you started the year with 1,000 customers.
Over the year, 800 of your existing customers made a purchase.
Likewise, over the year you gained 300 new customers. This means at the end of the year, you have 1,100 active customers.
Your final customer retention rate equation is:
( Customers End - Customers New ) / Customers Start
(1,100 - 300) / 1000
800/1000 = 80%
In other words, 80% of your existing customer base continued to be customers over the given time period (in this case, a year).
If you plot these retention rates over time, you get a retention chart, like the image below.
Product Categories - Segmenting by prod russian phone number list uct category allows you to see which products are most effective at creating loyalty and gives you the power to control for varying product lifecycles. Options include by brand, product lines, or more general product categories.
Demographics - Age, gender, and geographic areas can all reveal how your brand appeals to various groups of customers.
RFM Analysis - A more comprehensive eCommerce behavior segmentation based on past purchases across recency, frequency and monetary values.
2 Methods to Calculate eCommerce Customer Retention Rate
There are two primary ways eCommerce stores can measure customer retention rate.
Customer Retention Rate Method #1: Snapshot
The first method provides a more general view of how your store is retaining customers over a given period of time.
It uses three variables.
Customers Start - Number of customers at the start of a time period
Customers End - Number of customers at the end of a time period
Customers New - Number of customers acquired during the time period
The final equation looks like this:
(Customers End - Customers New) / Customers Start
I've labeled this approach the "snapshot" method because it gives you picture of your retention in one moment in time.
To illustrate, here is a simple customer retention rate example.
Let’s say you started the year with 1,000 customers.
Over the year, 800 of your existing customers made a purchase.
Likewise, over the year you gained 300 new customers. This means at the end of the year, you have 1,100 active customers.
Your final customer retention rate equation is:
( Customers End - Customers New ) / Customers Start
(1,100 - 300) / 1000
800/1000 = 80%
In other words, 80% of your existing customer base continued to be customers over the given time period (in this case, a year).
If you plot these retention rates over time, you get a retention chart, like the image below.