Picture this: You’ve just spent considerable time and money getting a customer to make their first purchase from your store. They’ve finally converted! But now what? Do you move on to finding the next customer with shopping ads, or is there a better way to grow your business?

That’s exactly why we’ve created this guide to customer retention in e-commerce. Whether you’re already implementing some customer retention strategies or starting from scratch, you’re about to discover proven approaches that can transform one-time buyers into loyal customers who keep coming back for more.

In this guide, we’re going to look at:

• What customer retention is and how to measure it.
• Why customer retention is so critical to your growth
• The metrics that actually matter for measuring customer retention (beyond just repeat purchase rate)
• How to calculate your Customer Lifetime Value (and why it matters)
• Two powerful email sequences that work on autopilot to keep customers engaged
• Real examples from successful brands like Dollar Shave Club, GoDaddy, and Bellroy

The best part? These customer retention strategies work automatically once set up – building a reliable system for growth that doesn’t require constant attention.

Understanding Customer Retention

Customer retention is about two things:

1. Increasing the number of repeat customers
2. Increasing the lifetime value of each existing customer

To put it simply, it’s about getting customers to buy more and more often. But there’s more to it than that. Customer retention strategies should extract more value from your existing customer base while ensuring those customers – the ones you worked so hard to acquire – stay with you, have an amazing experience, and continue getting value from your products over time.

Why Customer Retention Matters More Than Ever

Easier sales with lower acquisition costs

You’ve probably heard it before: it’s cheaper to keep existing customers than to find new ones. But let me share something fascinating from Marketing Metrics that puts this into perspective. The probability of selling to a new prospect is just 5-20%. But selling to an existing customer? That jumps to 60-70%.

Higher profit margins

According to Harvard Business Review, “Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one”, and also this: “increasing customer retention rates by 5% increases profits by 25% to 95%”

Higher average order value

A high customer retention rate means customers trust your products and company, leading to higher average order values. A study by Bain & Company showed that the longer a customer had a relationship with an online retailer, the more they spent over time. From the study – “In apparel, the average repeat customer spent 67 percent more in months 31-36 of his or her shopping relationship than in months 0-6. Similarly, grocery customers increased their spending by 23% in the same time frame

Repeat customers refer more people and bring in more customers

Satisfied, loyal customers are more likely to tell their friends and family, and those recommendations carry way more weight than any ad you could run. Word of mouth is the single most effective and cost-effective way to grow a business.

All of this becomes even more important in a crowded and competitive e-commerce space, where clicks and conversions seem to get more expensive by the day.

Measuring Your E-commerce Customer Retention Rate

Before we dive into strategies, let’s talk metrics. It’s really important to be able to measure and track customer retention. Otherwise, you just won’t be able to assess if your strategies are actually working. 

1. Repeat Customer Rate

This is perhaps the most critical measure of customer retention – it shows the percentage of customers who come back for a second purchase. The higher this rate, the more effectively you’re retaining customers (and the higher the customer satisfaction).

For many e-commerce platforms like Shopify, this number is calculated automatically. But if you need to calculate it yourself, here’s the formula:

Repeat Customer Rate = (Number of Customers with Multiple Purchases ÷ Total Number of Unique Customers) × 100

Measure this over a specific period (preferably a year) to get meaningful insights. While benchmarks vary by industry, most e-commerce businesses see a returning customer rate of 25-30%. But remember – what counts as “good” depends on your specific business, industry, and the kinds of products or services you sell. 

For example if you sell a turn-key solar system with a 10 year warranty for home owners, your repeat purchase of that item is probably going to be really low (but you could always upsell them some addons), but if you sell a monthly subscription cost your retention rate NEEDS to be higher than 30% or else you’re in trouble. If you can find metrics for your specific business model that’s what you should benchmark against.

Churn rate

The inverse of this is the customer churn rate – the percentage of customers who’ve stopped being your customers during any given time period. This is a really important metric for subscription businesses where the ultimate goal is keeping customers on a subscription for as long as possible. If customers are dropping off after 1 or 2 months on average, you know you’ve got a problem. But if you sell a product or service that people will only buy once or twice a decade, then churn isn’t really relevant to you.

2. The Value of Your Average Customer

While repeat customer rate is important, it’s not the whole story. Customer value will show you not just whether customers buy again, but:

• How often they make purchases
• The value of each order they place

Measuring customer value helps you understand how much each customer is truly worth by multiplying your average purchase frequency (in other words, the number of times customers buy in a given period) by your average order value.

We recommend calculating it over a 12 month period which you can then compare to the 12 month period before that to get an idea of how your customer loyalty and value is trending.

3. Customer Lifetime Value (CLV)

If you really want to geek out on metrics (and you should!), calculating your Customer Lifetime Value (CLV) is crucial. It shows how much a customer is worth to your business throughout their entire relationship with you.

Here’s the simple formula:

CLV = Average Order Value × Annual Purchase Frequency × Average Customer Relationship Length (in years)

Understanding CLV helps you make better business decisions by showing you:

• How much you can spend to acquire similar customers while staying profitable
• Which products attract your highest-value customers
• Which products drive the highest profitability
• Who your most profitable and loyal customers are

Understanding and tracking these metrics is a critical initial step. Not only are you seeing exactly how much the average customer is worth to you, you’re also getting valuable insights into customer loyalty, customer satisfaction, and how that measures up against your competitors.

But the next question is… how do you create a customer retention strategy that actually improves those metrics for your business?

Email Marketing: The Most Powerful Tool for Customer Retention

Now that we understand the metrics, let’s talk strategy. Inbound email marketing is incredibly powerful for retention, and here’s why: once you have a customer’s email address, you can keep engaging them without spending another cent on advertising (as long as they don’t unsubscribe, of course!).

Add to that the fact that email typically converts at a much higher rate than other channels. According to Shopify data from Black Friday and Cyber Monday, email had the highest conversion rate of other channels at 4.29% – dramatically higher than social media, search, or direct traffic as you can see below.

But there’s a catch: your emails need to actually engage and add value to your customer’s experience. Otherwise, they might have the opposite effect.

Let’s explore two powerful email sequences that can transform your retention rates.

(Also see: Top 5 Email Flows for Ecommerce)

Building Loyalty from Day One with The New Customer Email Sequence

This sequence is designed for first-time purchasers but can be tweaked for repeat buyers too. It’s a series of five strategic emails that guide customers through their post-purchase journey.

Email #1: The Post-Purchase Welcome (Immediate)

This email should go out immediately after purchase and include:

• Order confirmation
• Order number and billing summary
• Tracking information
• A heartfelt thank you
• Ask to follow your social media or join a private community if you have one
• Optional: A welcome discount for their next purchase (someone who just made a purchase are much more likely to make another purchase than someone browsing your website)
• Optional: Invitation to a customer loyalty program

Look at how GoDaddy does this – they combine order details, product access, customer reviews, and even product recommendations all in one powerful welcome email.

Pro tip: A video thank you is generally more memorable and better at building a relationship than plain text – especially for personality driven brands. 

Email #2: The Pre-Arrival Build-Up

Before the product arrives, build excitement by:

• Showing what the product will look like, preferably through video
• Including unboxing videos or setup guides
• Providing helpful content about using the product

The idea here is to create a positive customer experience and increase customer engagement. Note that when setting up this email, segment out first-time buyers and repeat customers. For repeat customers, you don’t want to be sending the same message after every purchase.

Sundays, the dog food company, does a great job with all their post-purchase emails, and this is a great example of an email that builds excitement while the customer is waiting for their order to arrive:

It’s loaded with a reminder of Sunday’s points of difference, a great image showing a dog eagerly anticipating eating the food (along with visual health reminders), educating about why their product is so much better, and a couple of testimonials to reinforce they made the right choice.

Email #3: The Post-Arrival Check-In

Send this 2-3 days after delivery to:

• Check in with them to see how their experience was
• Ask them for an honest review.

By doing that, you’re able to identify any issues with your product or sales experience.

If you receive positive feedback, you can take it a further step by asking them to review on a public platform to build social proof. You could ask them to take a selfie with your product and post it to social media, add it to your website, or even ask them for a video review, possibly with a small incentive to make it worth their while.

Have a look at how Bellroy asks for a review in their post purchase email. 

Very simple. And you can see here at the very bottom, you can just literally click on one of the numbers to rate your experience. 

That will then take you to a further page where you could write some more information about your experience if you want to. 

Or have a look at this one here from the pet food company called Chewy.

Again, very simple and to the point.

Email #4: The Smart Recommendations

As we’ve mentioned, you want to encourage repeat sales, and now is a good time to implement some upselling and cross-selling strategies. Approximately five days after your post-arrival email, send an automated product recommendation email to cross-sell relevant products or an accessory or upgrade to the product they recently purchased. The email should contain one or more of the following:

• Recommend relevant products based on their purchase
• Share complementary items
• Highlight popular combinations

Dollar Shave Club does a great job of this, cross-selling a toiletries bag to people who purchased razors.

Also note how easy they make it – click on a button, and you can automatically add it to your bag. You want to remove as much friction as possible.

Email #5: The Replenishment Reminder

The reality is that every product has a life cycle. Some are longer, some are shorter, but at some point, most products need to be either replaced or refilled. If your products have a lifespan of under a couple of years, it’s worth setting up an email to remind customers to place another order.

For example, if you sell pet food in packs that last a month, then the idea would be to send an email asking whether they’re running low about a week before the month is up.

This works brilliantly for:

• Pet food
• Office supplies
• Arts and crafts materials
• Makeup and skincare
• Cleaning supplies
• Supplements
• Baby products
• Medicines
• Supplements

Check out this replenishment email from Graze Shop. All they’re doing is inviting you to restock, showing you a couple of examples of something that might inspire your taste buds, and make it easy for you to click and order.

Recovering Lost Customers with The Win-Back Sequence

Let’s have a look at the second key email sequence – the win-back or re-engagement sequence. This is designed for customers who haven’t purchased from you in a while. “A while” depends on how long your product lasts before needing replacement or upgrades. For some businesses, this might mean 30 or 60 days of inactivity. For others, it could be six months or more. 

The good news? You can win back a significant percentage of these customers with a well-crafted re-engagement sequence.

And remember what we discussed earlier – it’s far cheaper to re-engage old customers than to find and nurture new ones. With that in mind, let’s walk through a proven five-email sequence you can customise for your business.

Email 1: The “Hello Again” Reminder

Your first email is to simply remind people that you exist. Keep it simple and to the point – inactive customers typically don’t want to read lengthy copy. Sometimes people simply get distracted and just need a little nudge to remember all the benefits you provide. This email should:

• Provide a gentle reminder of your existence
• Briefly recap your product benefits (sometimes people just need a nudge to remember why they chose you)
• Include a low-friction call to action inviting them back

Here’s a very simple minimalist example from Duolingo. 

Or look at Webflow, the website building platform – they’ve added in a video to engage former users and remind them of their benefits.

Both approaches work because they’re straightforward and user-focused.

Email 2: The Incentive Offer

If they haven’t responded to your first email, it’s time to up the ante. This email should focus on providing an incentive combined with a clear invitation to return. 

Look at how Crocs handles this – they offer $10 off your next purchase over $50. 

But your incentive doesn’t have to be a discount. Consider options like:

• Bonus gifts
• Free shipping
• Free upgrades
• Extra reward points
• Sweepstakes and prizes
• Free consultations

The key is choosing an incentive that makes sense for your business model and customer base.

Pro tip: a study found that a dollar-off discount consistently performed two times better than a percentage discount. Specificity and doing the math for the prospect wins.

Email 3: The Feedback Request

If your incentive hasn’t worked, it’s time to try a different approach – asking for feedback. This email serves multiple purposes:

• Gives you direct insight into what customers want to see in their inbox
• Shows customers you value their opinion
• Helps improve your segmentation
• Provides valuable insights for future marketing

When a customer is on the fence, showing that you care about their experience can inspire them to give you another chance. Plus, the feedback you receive can help you send more relevant emails to different customer segments.

Look at WeddingWire’s approach below:

They use a simple text-based email asking customers to click on options that resonate with them:

• Too many emails
• Emails weren’t relevant
• Too many ads and offers
• I like the emails, keep them coming

This makes it incredibly easy for customers to provide feedback while giving you valuable insights.

Email 4: The List-Cleaning Notice

After three emails without response, it’s time to clean house. The basic idea is to politely tell your customers and subscribers that they’ll be removed from your email list if they don’t choose to keep receiving emails by clicking the opt-in button. This leverages reverse psychology, creates a sense of urgency and can motivate people to take action. 

But this email also serves another essential purpose – improving your email deliverability. Having an unresponsive email list can hurt your deliverability rates – ie. when people don’t engage with your emails, they’re more likely to end up in spam folders.

If you make people click to opt out, you can’t actually tell if they’ve really decided to stay on your list or if they’ve just ignored another email. That’s why it’s better to ask people to explicitly opt in to continue receiving emails.

Look at Sidekick’s (a HubSpot product) approach – they use a prominent blue button saying “Wait, keep me subscribed!” This makes the action clear and simple for interested customers.

Email 5: The Final Goodbye

If they haven’t responded to any previous emails, it’s time to follow through with your word and unsubscribe them. This final email should:

• Confirm their unsubscription
• Provide an easy way to resubscribe or adjust their email preferences if they change their mind or missed the previous email
• Include one final reminder of your incentive offer
• Keep the door open for future engagement

Think of this as your “final bite of the cherry” – one last chance to win them back while maintaining professional courtesy. 

Here’s how Atlas Obscura does it:

Customer Retention Emails Implementation Tips

Let’s get practical about implementing these email sequences. Here are some tips to help you bring all this together.

Subject Line is King

Subject lines have the biggest impact on email results by far. If people don’t open your email, it doesn’t matter how great your offer is – they’ll never see it. For every email you send, write at least 10 headline variations and pick the best one. Get your colleagues and friends to vote. Better yet, pick 2 headlines and split-test them to see which performs the best in real-time – most email marketing platforms make this easy.

Perfect Your Preheader

Don’t forget about your preheader – that text that sits next to your subject line in the inbox. Think of it as an extension of your subject line. Keep it short, engaging, and designed to pique interest. Curiosity wins when it comes to the pre-header.

Sender Details Matter

Don’t send marketing emails from a no-reply address (like no-reply@yourbusiness.com). No reply email addresses are fine for transactional emails (eg. here’s your receipt) but when you’re trying to build a relationship with a new customer, no-reply is saying the exact opposite – please don’t bother us, we’re not interested!

Also, if you force people to hunt down your customer service number or support area when they have questions, they’re much less likely to reach out, and you lose out on valuable feedback and dialogue with actual customers. 

So use an email address they can actually reply to, while keeping it a branded email address coming from your domain. You’ll seem more approachable, get more opens, get more clicks, get more customer feedback, and ultimately your marketing emails will be more successful.

Design With Purpose

When it comes to e-commerce email marketing, less is often more. While opinions vary, here are two guiding principles:

1. Don’t go completely text-only – include some branding elements so people immediately recognise who the email is from. Include a beautiful, high quality photo of your product, or of your product being used, where it makes sense to do so – eg. not in the list-cleaning emails.
2. Don’t go overboard with fancy design elements – too many images, animated GIFs, or complex layouts can trigger spam filters and be slow to open and difficult to navigate – remember most people will be opening these emails on a mobile sized screen

The key is finding the right balance for your brand and audience.

Timing Is Everything

There are bad times and there are good times to send emails. For example, sending an email at 2am will bring you lower opens than sending one at 2pm. If you’ve been doing email marketing for a while, your email marketing platform should have a reports area where you can see which days and times of day get the most opens. But typically anytime between 8am and 6pm is going to be ok with bumps in the morning, just before and after lunch, and mid-afternoon on Tuesdays-Thursdays. 

The caveat here of course, is that some emails need to be sent immediately. Eg. if someone unsubscribes/resubscribes or makes a repeat purchase, you want to send the confirmation email immediately. 

Your Action Plan for Implementation

Ready to put these sequences to work? Here’s your step-by-step plan:

1. Use our customer retention sequence template to draft your nurture and win-back sequences
2. Connect your email provider to your site to enable the sequences
3. If you don’t have an email provider, set one up (or get help setting it up)
4. Test your sequences to ensure they’re working properly
5. Monitor your conversion rates consistently
6. Adjust your approach based on the data

Make sure that it’s actually delivering an increase in your customer retention rate, average customer value, your lifetime customer value, and adjust accordingly.

The bottom line? When you put serious thought into engaging your customers through these email sequences – whether it’s the new customer sequence or the win-back sequence – you can significantly increase your retention rate and customer lifetime value and, therefore, the profitability of your business.

Ready to grow your customer value?

Start by choosing one strategy from this guide and implement it today. Remember, the perfect is the enemy of the good – it’s better to start small and improve over time than to wait for the perfect implementation.

Get the Full Training Video About Customer Retention + Free Customer Retention Email Sequence Template

Need help getting started? 

Setting up effective email sequences and implementing retention strategies can feel overwhelming. You know the potential impact on your business, but getting all the technical pieces right – from email automation to timing, segmentation, and tracking – takes significant time and expertise.

That’s where Digital Autopilot comes in. Our team of e-commerce specialists has helped hundreds of businesses just like yours implement successful retention strategies that drive real results.

Start With a Free Strategy Session

Book a free 30-minute strategy session with one of our strategy experts. We’ll:

• Review your current retention metrics
• Identify key opportunities for improvement
• Provide actionable recommendations for your business
• Explain how we can help implement these strategies for you

Don’t leave money on the table by neglecting your existing customers. Take the first step toward better retention today.