August 7, 2025

3 Ways to Measure Retention, Only One Tells the Whole Story

3 Ways to Measure Retention, Only One Tells the Whole Story

If you run an e-commerce or direct-to-consumer (DTC) brand, measuring customer retention isn’t optional; it's the difference between predictable growth and constant firefighting. But not all retention metrics reveal the same insights. Some measure basic repeat purchase behavior, while others dig deeper into revenue stability and long-term loyalty.

Are you tracking the right metrics?

Let’s dive into the differences between Customer Return Rate, Repeat Customer Rate, and Gross Retention Rate, and why only one truly shows whether your retention strategy is working.

What Is Customer Return Rate?

Customer Return Rate is a simple retention metric that tells you the percentage of first-time buyers who place a second order.

How to Calculate Customer Return Rate

Example:

  • You acquired 1,000 new customers this year.
  • 250 came back to buy again.
  • Your Customer Return Rate is 25%.

When to Use It

  • To measure how effectively you convert first-time buyers into repeat customers
  • To assess the impact of welcome campaigns and post-purchase emails

Limitations:
Customer Return Rate doesn’t show how often customers return after their second purchase or how much they spend over time.

What Is Repeat Customer Rate?

Repeat Customer Rate measures the percentage of all customers in a period who placed more than one order. It goes beyond just first-time buyers.

How to Calculate Repeat Customer Rate

Example:

  • You served 1,200 customers last quarter.
  • 400 ordered more than once.
  • Your Repeat Customer Rate is 33%.

When to Use It

  • To track overall customer loyalty
  • To benchmark retention across different time periods
  • To understand the proportion of engaged customers

Limitations:
This metric still doesn’t account for how much revenue each customer contributes.

What Is Gross Retention Rate?

Gross Retention Rate (GRR) measures how much revenue you retained from existing customers, excluding any new sales or upsells.

This is the metric that tells the whole story not just whether people returned, but whether they continued spending at the same level.

How to Calculate Gross Retention Rate

Example:

  • You started Q1 with $100,000 in recurring or repeat purchase revenue.
  • You lost $15,000 due to customers who didn’t reorder or reduced their spend.
  • Your GRR is 85%.

When to Use It

  • To measure revenue stability and customer value over time
  • To track the impact of churn separately from growth
  • To forecast retention-driven revenue

Why It Matters Most:
Unlike Customer Return Rate or Repeat Customer Rate, GRR captures the financial health of your existing customer base. It shows whether you’re building sustainable growth or relying on constant acquisition to replace lost revenue.

Why Gross Retention Rate Is the Most Important Retention Metric

If you only track whether people came back, you miss the big picture:

  • Did your best customers keep spending?
  • Are you retaining high-value buyers, not just any buyers?
  • Is your business set up to grow without overspending on acquisition?

Gross Retention Rate is the clearest indicator of loyalty and profitability because it reflects actual dollars retained. For DTC brands that rely on repeat purchases, subscriptions, or replenishment cycles, GRR should be your north star. Because it excludes new sales and upsells, it isolates the impact of churn and customer loyalty.

Customer Return Rate and Repeat Customer Rate can give you a snapshot of buyer behavior, but only Gross Retention Rate tells you if your revenue foundation is solid.

At Cohora, we help brands improve all three metrics so you can build lasting relationships, reduce churn, and unlock predictable growth.

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