How to Calculate Customer Retention Rate in Excel for Growth

Introduction

Acquiring a new customer can cost anywhere from five to twenty-five times more than retaining an existing one. In an era where advertising costs are steadily climbing and platform fatigue is a reality for many marketing teams, the ability to keep the customers you already have is the most significant competitive advantage an e-commerce brand can possess. At Growave, our mission is to turn retention into a growth engine for your brand by moving away from fragmented tools and toward a unified ecosystem. To start this journey, you must first understand your current standing, and that begins with knowing how to calculate customer retention rate in excel to track your progress over time.

While many tools provide automated dashboards, there is immense value in understanding the raw mechanics of your data. Calculating your retention rate manually allows you to segment your audience, identify specific cohorts that are slipping away, and recognize the patterns that lead to long-term loyalty. This post will walk through the exact formulas you need, how to structure your spreadsheets for clarity, and, most importantly, how to translate those numbers into a strategy that reduces one-and-done purchases.

We believe in a merchant-first approach, which means providing you with the transparency and foundational knowledge to manage your store’s health. Whether you are a growing startup or an established Shopify Plus brand, mastering these metrics is the first step toward building a sustainable business that thrives on repeat revenue rather than just constant acquisition.

Understanding the Core of Customer Retention

Retention is the heartbeat of a healthy e-commerce business. It measures the percentage of customers who continue to shop with you over a specific period. If you start a month with 100 customers and only 80 of them return to make a purchase or remain active in your ecosystem, your ability to hold onto those relationships dictates your long-term stability.

High retention rates generally signal that your product quality, customer service, and post-purchase experience are aligned with customer expectations. Conversely, a low retention rate often points to "leaks" in the customer journey. Perhaps the shipping was too slow, the unboxing experience was underwhelming, or you simply didn't give them a compelling reason to come back.

By measuring this metric, you move from guesswork to precision. You can see exactly when customers stop engaging, allowing you to intervene with targeted loyalty initiatives or better social proof. Our goal is to help you move beyond the "one-and-done" cycle and create a cohesive retention system that feels natural to your customers and manageable for your team.

The Mathematical Foundation of Retention

Before opening your spreadsheet, you need to understand the basic formula that governs this metric. The Customer Retention Rate (CRR) is calculated by looking at your customer count at the start and end of a period, while carefully removing any new customers acquired during that window. This ensures you are measuring the loyalty of your existing base rather than the success of your top-of-funnel marketing.

The standard formula is: ((End Period Customers – New Customers Acquired) / Start Period Customers) × 100

To use this formula effectively, you need three specific data points for any given timeframe, such as a month, a quarter, or a year:

• The number of customers you had at the very beginning of the period.
• The total number of customers you have at the very end of the period.
• The number of brand-new customers who made their first purchase during that period.

By subtracting the new acquisitions from your final total, you isolate the "survivors" from your original group. Dividing that number by your starting count gives you the decimal version of your retention rate, which you then multiply by 100 to get a percentage.

Setting Up Your Excel Spreadsheet

To make this process repeatable, you should structure your Excel sheet in a way that allows for easy data entry and automatic calculations. We recommend creating a clean table where each row represents a different time period. This allows you to track trends and see if your retention efforts are paying off over the months.

You can organize your columns as follows:

• Column A: Time Period (e.g., January 2024, February 2024).
• Column B: Customers at the Start (S).
• Column C: New Customers Acquired (N).
• Column D: Customers at the End (E).
• Column E: Retention Rate Formula.

Once your columns are labeled, you can enter your data. For the formula column, if your first row of data is in row 2, your Excel formula would look like this: =((D2-C2)/B2)*100. After you hit enter, you can drag the corner of that cell down to apply the formula to all future rows. This simple setup gives you a living document of your brand's health.

Key Takeaway: Consistent tracking is more important than occasional deep dives. By updating this Excel sheet monthly, you can quickly spot a dip in retention and address it before it impacts your annual revenue.

Distinguishing Between CRR and Churn Rate

In the world of e-commerce metrics, retention and churn are two sides of the same coin. While retention measures who stayed, churn measures who left. If your retention rate is 80%, your churn rate is naturally 20%.

Monitoring both is essential because they tell different stories. A high retention rate is a badge of success, showing that your Loyalty & Rewards programs and engagement strategies are working. On the other hand, the churn rate is often a diagnostic tool. If you notice your churn rate spiking after the first 30 days of a customer's journey, it suggests that your onboarding or initial post-purchase follow-up is lacking.

• Retention Rate focuses on loyalty and the growth of your community.
• Churn Rate focuses on loss and the points of friction in your store.
• Both metrics should be viewed alongside each other to get a 360-degree view of your customer lifetime value.

Revenue Retention vs. Customer Retention

While counting heads is important, counting dollars is often more critical for your bottom line. This is where Revenue Retention Rate (RRR) and Net Revenue Retention (NRR) come into play. Customer retention treats every customer as equal, but in reality, a customer who spends $500 a year is more valuable to your business than one who spends $20.

Revenue Retention measures the percentage of revenue you have retained from your existing customer base over time. This is particularly useful if you have a wide range of product prices or a subscription model. If you lose five small-spending customers but retain one "whale" who outspends them all, your customer retention rate might look poor, but your revenue retention will remain strong.

Net Revenue Retention takes this a step further by including "expansion revenue." This refers to existing customers who decide to spend more than they did in the previous period—perhaps by upgrading to a larger bundle or adding more items to their routine.

• Gross Revenue Retention: (Starting Revenue - Churned Revenue) / Starting Revenue.
• Net Revenue Retention: (Starting Revenue + Expansion Revenue - Churned Revenue) / Starting Revenue.

If your NRR is over 100%, it means your existing customers are growing your business for you, even without any new acquisitions. This is the gold standard for sustainable growth and a key focus for brands using a unified retention suite to maximize the value of every account.

How to Calculate Retention for Non-Contractual Brands

For SaaS companies, retention is easy to track because customers either have an active subscription or they don't. For most e-commerce merchants, the definition of an "active" customer is more fluid. If a customer hasn't bought anything in six months, are they churned? Or are they just waiting for the right moment?

To calculate your retention rate in Excel effectively, you must define your "active" window. This is usually based on your product's natural lifecycle. If you sell coffee, your window might be 30 days. If you sell high-end furniture, it might be two years.

• Identify your average time between purchases.
• Set a threshold (e.g., any customer who hasn't purchased within 2x the average time is considered churned).
• Use this threshold to pull your "End of Period" customer counts from your Shopify admin into your Excel sheet.

This nuance is why we emphasize a "merchant-first" mindset. Every brand is different, and your data should reflect the reality of your specific niche.

Strategic Ways to Improve Your Retention Rate

Calculating the numbers is only the first half of the battle. The real work begins when you use those insights to change how you interact with your customers. If your Excel sheet reveals that your retention is lower than the industry average, it is time to look at your retention ecosystem.

One of the most effective ways to move the needle is by reducing purchase anxiety and building trust through social proof. When visitors see real photos and honest feedback from other customers, they feel more confident in their decision to return. Integrating Social Reviews throughout your site—on product pages, checkout, and even in your email marketing—creates a loop of trust that encourages repeat behavior.

Additionally, you can look at your post-purchase journey. Are you reaching out to customers after they receive their order? Are you rewarding them for their loyalty? At Growave, we see that brands that unify their reviews, loyalty programs, and wishlists into one connected system often see more consistent retention because the customer experience feels seamless.

The Role of Loyalty Programs in Retention

A well-structured loyalty program is one of the most powerful tools for improving the numbers in your Excel sheet. By giving customers a reason to come back—whether through points, exclusive VIP tiers, or referral bonuses—you create a "switching cost." If a customer has $20 worth of points in your store, they are much less likely to shop with a competitor.

When you look at your retention data, you might notice that customers who join your loyalty program have a significantly higher retention rate than those who don't. This insight allows you to double down on your efforts to get more people into the program.

• Offer points for more than just purchases, such as following your social media or leaving a review.
• Create VIP tiers that offer increasing benefits, encouraging customers to reach the next level of status.
• Use automated emails to remind customers of their points balance, bringing them back to your store when they might have otherwise forgotten.

By connecting these incentives directly to your store, you build a sustainable growth engine. You can explore how to set up these tiers and rewards by visiting our Loyalty & Rewards page to see the possibilities for your brand.

Using Wishlists to Capture Intent

Sometimes a customer isn't ready to buy right now, but that doesn't mean they aren't "retained." Wishlists are a vital part of the retention journey because they capture intent. If a customer adds five items to their wishlist, they are signaling a high likelihood of a future purchase.

In your Excel tracking, you might want to create a separate tab for "Engagement Retention." This tracks how many customers are interacting with your site even if they haven't made a purchase this month.

• Wishlists allow customers to save items for later, reducing the chance they will forget about your brand.
• You can use wishlist data to send personalized "back in stock" or "price drop" notifications.
• This keeps your brand top-of-mind and provides a natural bridge to the next purchase.

Building Social Proof with User-Generated Content

Trust is the foundation of any long-term relationship. In e-commerce, that trust is built through the voices of other customers. High-growth brands don't just wait for reviews to happen; they actively collect and display user-generated content (UGC) to validate the quality of their products.

If your retention rate is struggling, it may be because new customers don't feel a strong connection to your brand's community. By showcasing real photos and videos from happy customers, you lower the barrier to that second and third purchase.

Using Social Reviews effectively means more than just having a list of stars at the bottom of a page. It means highlighting the most helpful reviews, responding to feedback, and showing potential repeat buyers that you are an active, trustworthy merchant. This level of engagement is what turns a simple transaction into a lasting relationship.

The Pitfalls of Platform Fatigue

Many merchants try to build their retention strategy by stitching together five or six different solutions—one for reviews, one for loyalty, another for wishlists, and so on. This often leads to what we call "platform fatigue." Not only is it expensive, but it also creates a fragmented experience for the merchant and the customer.

When your tools don't talk to each other, you lose out on valuable data. For example, if your review system doesn't know that a customer is a member of your loyalty program, it can't automatically reward them for leaving a photo review.

Our "More Growth, Less Stack" philosophy is designed to solve this problem. By using a unified system, you ensure that every part of your retention strategy is working in harmony. This leads to a more powerful, more connected experience that is easier for your team to maintain. Instead of managing half a dozen subscriptions, you can focus on the strategy that actually moves the numbers in your Excel sheet.

Industry Benchmarks: What is a "Good" Retention Rate?

Once you have calculated your rate, the natural next question is: "How do I compare?" While every niche is different, there are some general benchmarks you can use to gauge your performance.

• Media and Professional Services: Often see retention rates as high as 84%.
• E-commerce and Retail: Typically hover around 60% to 65%, though top-tier brands often exceed 70%.
• SaaS and Subscription: Usually aim for 90% or higher due to the nature of their business model.
• Hospitality and Travel: Can be lower, around 55%, as purchases are often less frequent.

If your rate is below these averages, don't panic. Use it as a starting point for improvement. Small changes in your customer journey can lead to significant jumps in retention over time. Increasing your retention by just 5% can lead to a profit increase of 25% to 95%, making it one of the most impactful things you can do for your business.

Advanced Metrics to Supplement Your Excel Sheet

While CRR is the primary metric, a truly sophisticated growth strategy uses a few other indicators to provide context. You can add these to your Excel workbook to get a deeper understanding of your performance.

Net Promoter Score (NPS)

NPS measures customer satisfaction and loyalty by asking one simple question: "How likely are you to recommend us to a friend?"

• Promoters (9-10): Your brand advocates who drive organic growth.
• Passives (7-8): Satisfied but not enthusiastic customers who are susceptible to competitors.
• Detractors (0-6): Unhappy customers who can damage your reputation. Subtracting the percentage of detractors from the percentage of promoters gives you your NPS.

Customer Lifetime Value (CLV)

CLV predicts the total net profit you will earn from a customer over the entire duration of your relationship. This helps you determine how much you can afford to spend on acquiring new customers. If your CLV is high, you can be more aggressive with your marketing.

Repeat Purchase Rate (RPR)

This is the percentage of customers who have made more than one purchase. It is a simpler version of retention that is especially useful for brands without subscriptions. You calculate it by dividing your repeat customers by your total number of customers.

Scenario: When Your Retention Drops After the First Order

A common challenge for Shopify merchants is the "second purchase cliff." You might find that you are great at acquiring new customers, but a large percentage of them never come back for a second order. If your Excel sheet shows a high acquisition rate but a low retention rate, your focus should be on the "Aha! moment."

The "Aha! moment" is the point when a customer truly realizes the value of your product. If they don't reach this point quickly, they will churn. To combat this:

• Send a personalized follow-up email three days after the product is delivered.
• Include a "how-to" guide or tips on how to get the most out of their purchase.
• Offer a time-limited discount on their next order to create immediate momentum.
• Showcase reviews from other customers who have used the product successfully.

By focusing on the immediate post-purchase experience, you can bridge the gap between the first and second purchase, which is often the hardest part of the customer journey.

Scenario: When Visitors Browse but Hesitate

Sometimes, your retention problem starts before the customer even leaves. If visitors are coming back to your site but not buying, they are "browsing but hesitating." This is where social proof and wishlists become essential.

If your data shows high traffic but low repeat conversion:

• Make sure your wishlist feature is prominent so they can "save for later" without the pressure of an immediate checkout.
• Use retargeting ads or emails based on their wishlist items.
• Display "Verified Buyer" badges and photo reviews on your most-viewed products to build trust.
• Ensure your site is fast and mobile-friendly to reduce friction.

These small adjustments can turn a hesitant browser into a loyal customer, improving your long-term retention stats.

Moving from Excel to Automated Insights

While we have spent a lot of time on how to calculate customer retention rate in Excel, the ultimate goal for any scaling brand is to spend less time in spreadsheets and more time on strategy. Manual calculations are great for learning, but as your store grows, you need real-time data to make quick decisions.

This is where a unified retention solution becomes invaluable. Instead of pulling data from different places and manually updating your Excel sheet every month, you can have a dashboard that shows you your retention trends, loyalty engagement, and review performance all in one place.

At Growave, we build for merchants, not investors. Our system is designed to be stable, long-term, and merchant-first. We are trusted by over 15,000 brands and maintain a 4.8-star rating on the Shopify marketplace because we focus on what actually works for e-commerce teams. Whether you are looking for advanced Shopify Plus solutions or a simple way to start your retention journey, having all your tools under one roof is the most efficient path to growth.

The Long-Term Benefits of a Retention-First Mindset

Shifting your focus from acquisition to retention is a fundamental change in business philosophy. It means valuing the customers you have as much as the ones you want. Over time, this mindset creates a more resilient business that is less dependent on the whims of advertising algorithms.

A retention-first brand:

• Enjoys higher profit margins because repeat orders have no acquisition cost.
• Builds a community of brand advocates who provide free word-of-mouth marketing.
• Has a more predictable revenue stream, making it easier to plan for the future.
• Creates a better customer experience by focusing on long-term value rather than short-term gains.

By mastering the calculation of your retention rate, you are taking the first step toward this more sustainable future. You are giving yourself the data you need to identify problems, test solutions, and measure your success.

Practical Checklist for Improving Your CRR

To help you get started, here is a practical checklist of actions you can take today to improve the numbers you are tracking in your Excel sheet:

• Audit your post-purchase email flow: Does it provide value, or just a receipt?
• Check your loyalty rewards: Are they easy to earn and meaningful to your customers?
• Review your social proof: Do you have recent photo reviews on your top-selling items?
• Simplify your tech stack: Are you using multiple tools that could be replaced by a unified system?
• Talk to your customers: Use surveys or NPS to find out why they stay or why they leave.

Retention is not a one-time project; it is a continuous process of refinement. The brands that succeed are the ones that stay curious about their data and committed to their customers.

Why Growave is the Partner for Your Retention Journey

In the crowded landscape of e-commerce solutions, Growave stands out by offering a more powerful, more connected retention system. We understand the challenges of platform fatigue because we’ve seen merchants struggle with it for years. Our "More Growth, Less Stack" approach is more than just a slogan; it is a commitment to making your life easier and your business more profitable.

By unifying Loyalty & Rewards, Reviews & UGC, Wishlists, Referrals, and Shoppable Instagram into one ecosystem, we give you a level of insight and control that is impossible with fragmented tools. You can see how a referral program impacts your retention rate or how photo reviews drive higher lifetime value for your VIP tiers.

We invite you to see how these pieces fit together for your specific brand. You can see current plan options and start your free trial on our pricing page to begin building your own unified retention engine. Our team is here to support you every step of the way, providing the tools and guidance you need to turn your existing customers into your greatest growth asset.

Conclusion

Calculating your customer retention rate in Excel is more than just a mathematical exercise; it is an act of taking control of your brand's future. By understanding the formulas for CRR, RRR, and NRR, and by setting up a consistent tracking system, you move away from the uncertainty of constant acquisition and toward the stability of long-term loyalty. The insights you gain from your data will highlight the strengths of your community and the areas where you can improve the customer journey.

Remember that retention is a holistic effort. It requires great products, exceptional service, and a connected ecosystem of loyalty, reviews, and engagement. When you stop treating these elements as separate tasks and start seeing them as a unified system, your growth becomes much more sustainable. We are proud to be a stable, long-term partner for thousands of merchants who share this vision.

Install Growave from the Shopify marketplace to start building a unified retention system that turns your data into lasting growth.

FAQ

What is a good customer retention rate for e-commerce?

While it varies by industry, a healthy e-commerce retention rate typically falls between 60% and 70%. Brands with very high-frequency products, like groceries or consumables, may see even higher rates, while luxury or one-time purchase items may be lower. The most important thing is to track your own baseline and aim for consistent improvement.

How often should I calculate my retention rate in Excel?

For most Shopify merchants, a monthly calculation is ideal. This allows you to see the impact of your marketing campaigns, seasonal changes, and new loyalty initiatives without getting lost in daily fluctuations. For high-volume brands, a weekly check can help spot more immediate trends.

What is the difference between Gross and Net Revenue Retention?

Gross Revenue Retention only looks at the revenue you kept from your existing customers, minus any losses. Net Revenue Retention includes "expansion revenue," which accounts for existing customers who spent more this period than the last. NRR is a powerful indicator of how much your current customer base is growing your business.

Can I calculate retention if I don't have a subscription model?

Yes, and it is vital that you do. In a non-contractual model, you simply need to define an "active" period based on your product's lifecycle. If your average customer buys every 60 days, you might consider anyone who hasn't purchased in 120 days as churned. This allows you to apply the standard CRR formula to your customer segments.