REPEAT COMMERCE: 03 - The Repeat Rate Shopify Doesn’t Show You

0:05So your Shopify store says 40 % of your customers come back. That's great. You're above average. You feel great and you move on with your day. But there's a problem. That 40 % is actually answering a different question than the one you think you asked. Shopify is quietly blending three completely different behaviors into one number. People whose subscription just rebuild, that's one. People wandering back after two years or five years and just happen to be purchasing again. And then three, people who actually choose to buy from you again on purpose on a regular schedule. Those are not the same thing.

0:46And only one of those numbers actually tells you if you've built something powerful that lasts. And today we're going to pull them apart and we're going to find the number that Shopify doesn't show you directly on their dashboard. So welcome back to Shopify 1%. I'm Jay Myers. And this is episode number three of the repeat commerce series. Now, if you missed episode one and two, definitely go back and listen to them. Just look for the titles called repeat commerce. Episode one, episode two, you'll see them. You'll see them on the podcast because we're building on each episode. Last episode, we proved that a dollar of revenue is not always worth a dollar.

1:30So same top line, but opposite sign, depending where it came from. Now, if you actually ran that math last episode and you brought it up in a budget conversation, tell me about it. Leave a comment and leave a note wherever you're watching this. I read every single one. Shoot me an email, jay at shopify1%.com. So today it's actually a similar trap, just one level deeper. Last time a dollar of revenue was hiding its true cost. This time, one point of repeat rate is hiding what kind of behavior it's actually measuring because one point of repeat rate isn't always worth a point either. So by the end of this episode, you'll have a number that I'm going to call your elective second purchase rate.

2:18I don't know if this is an official term. Let's call it your ESPR. It's your elective second purchase rate. Now, elective, as in the customer actually elected to come back. They chose to. No subscription, auto recharging them and doing the work for them. And this is the cleanest read you can get on whether people actually want your product again. And I'll show you two ways to pull this. One is super simple and it's super easy to get. You just have to know how to do it. Now, one very important thing before we continue. there is a downloadable piece of what's a scorecard to go along with this episode make sure you download it for episode one and two in episode one we had two numbers I talked to you how to run them for your store in episode two we have three numbers that you pull out and a little calculation each one of them is going to build on and each time that there's a new episode we're going to add a new metric.

3:19So make sure you grab it today. Just go down in the comments. There's going to be a link and you can download the episode so that, sorry, the scorecard for this episode so that you can actually put in the information for your specific store that we are measuring. So make sure you grab the actual PDF from the link in the comments. OmniSend just shipped something that I've always wanted. You can now connect OmniSend to ChatGPT or Claude and just say, where can my email and SMS campaigns be making more money? And it actually figures it out. It reads your store data, all your campaign details, your store history, and it tells you, and the insights are legit good.

3:54And even better, you can then say, okay, let's fix that or build that campaign. And it actually does it right from your chat. It's wild. Now, if you're one of our listeners, you can get 30 % off for three months on OmniSend. Just go to the show notes. There's a link there. Or you can just use the code J30, J-A-Y-3-0 when you sign up. Now, if you're using another email and SMS platform and you want to switch to OmniSend, which is a great idea, they will do the migration for you. Just give them five days and then you show up with everything set, ready to go. Now they've migrated thousands of stores from Klaviyo and on average, they're saving 35 % on their email and SMS bills.

4:30If you're listening to this show, you clearly care about your Shopify business. If your store isn't backed up and protected, it could all be for nothing. That's why I tell every store owner I know who cares about their business, you 100 % need Rewind installed. It's a non-negotiable for me. One bad CSV import, one app that edits your store the wrong way, which has happened to basically everyone I know. One bulk edit gone wrong, and now AI making changes for you. Listen, Shopify does not have an undo button. Rewind is the undo button. Go to Shopify1 %.com slash rewind for 30 days free on us. Links in the show notes too.

5:12Last year, I went to Commerce Roundtable in San Diego and it was so good. I'm going back again this year. It's September 21st and 22nd. And honestly, you should come to. It's the one e-commerce event that I recommend to everybody without blinking. It's not a trade show. There's no booth demos. It's really just operators on stage sharing what's actually working in their stores right now. and it's basically a room full of all founders. I was actually scrolling through my camera roll from last year and I have over a hundred pictures of slides from people's talks. It's, I learned so much. It's that kind of an event.

5:44Now I have five passes to give away for a 30 % off ticket. It's first come first serve. So if you're interested, email me jay at shopify1percent.com and I will hook you up. They will go fast. So email if you're interested. And if you're going, come say hi. Let's grab a coffee or a drink during happy hour. I'd love to meet you.

6:08Okay, let's start with why the number you probably check every morning can't actually answer the question that matters. Revenue and ROAS both look backwards. Revenue tells you money that came in. ROAS tells you an ad that worked last week before costs shifted. So it's useful, but neither one tells you the thing you actually need to know, which is whether this keeps happening without you paying to make it happen. So you can post a record revenue month, but actually be in real trouble. And we actually covered that, how that happens in the last episode. If that revenue came from first-time buyers who paid$35 to acquire, the revenue chart looks great, but the P &L statement is having a very different opinion.

6:57Now, I want to be careful here because repeat rate is also calculated from past behavior. It's historical too. And anyone who tells you it's a crystal ball is overselling it. But here's the difference that matters. Revenue measures the result. Repeat behavior tells you whether that result has a chance to compound and whether last year's customers are quietly becoming next year's demand or whether you start every January back at zero renting all of them again from Meta. So the one liner I'd tattoo on the wall is revenue tells you what happened. Repeat rate tells you whether you have to go and buy it all over again.

7:41And I'm not going to go and pretend that it's the only number that matters. Margin matters. Cash flow matters. There's so many other things. If I said repeat rate was the single thing that predicts everything, some MBA would email me very politely and tell me to change or that I was wrong. And you know what? They'd probably be right. But it's one of the clearest signals of whether your growth is compounding or resetting. And that's the honest version of this claim. So track rate behavior, good. Except the repeat number sitting on your dashboard in Shopify isn't quite the one you think it is. So let's clear something up because I've heard people, including me, sometimes say that Shopify's returning customer rate is misleading.

8:27Now, that's not fair and I want to correct it. Shopify's number isn't wrong. It calculates exactly what it says. Your returning customer rate is, of all customers who order during a period you selected, how many of them ordered at some point before. Okay, that's Shopify's returning customer rate. Now that's it. And that's a real correctly computed number. But the catch is what merchants think it means versus what it actually means. So most people read it as what percentage of my customers come back? It's a loyalty number. But it actually isn't. It's a customer mix number. It tells you the blend of new versus previously seen buyers in a given window?

9:13Two different questions and you can feel the gap once you say them out loud. Shopify's returning customer rate asks of everyone who ordered this period, how many of them had ordered before? The question you actually care about asks of the customers I acquired, how many came back within a meaningful window and deliberately chose to buy again? That's what you want to know. That second question is the one that predicts everything. And there are two things kind of muddying that first number that keeps it from answering the second. And one I planted back in episode one, we talked a little bit about it.

9:54It counts everyone who ordered, even a one-time buyer from three years ago who just happened to buy again last month. It's fine to include, but it pads the number and doesn't give you what you actually want to know. And genuinely, I don't know why the dashboard version reaches all the way back like that instead of using a window. My best guess is just simpler to compute at scale, but that's a guess. If someone at Shopify knows the same, the reason I'd honestly love to hear it. In fact, I'd love to have someone at Shopify, maybe from the analytics team on the podcast, because I'd love to hear it and explain.

10:30So the second thing kind of really muddy in the water is the big one that I want to talk about today, which is subscriptions. So if you run subscribe and save or a replenishment subscription of any kind, every recurring order counts as a returning purchase. And technically that's true, but I want to be precise here because it's easy to be cynical about this and I don't want to be. A subscription renewal is real revenue and real retention. The customer signed up on purpose and they haven't canceled and they keep accepting the product every month and the charge. And that's genuinely a good thing.

11:08Trust me, that's great. You want subscribers. It's just measuring a different kind of retention. It tells you that the customer hasn't left. It doesn't tell you they came back and made a fresh decision to buy from you again. And those are both worth knowing and they're not the same. A renewal is a continuation. An elected second purchase is a new yes. So you actually, you need both numbers. And here's the insight I want you to take from this episode. A strong subscription program can completely coexist with a week repeat business everywhere else. And I've seen this many times. The subscriptions can be humming along while the rest of your customers are a leaky bucket.

11:56And if you only look at the blended dashboard, you will never see it. A healthy subscription program can hide a weak retention repeat program on the other side. And that's why we separate them. So let's put some real numbers behind it. I'm going to go back to the whiteboard here. In episode two, we went to the whiteboard with the coffee brand again, so it's familiar. And I'm going to build this out as I'm going to build out a proper cohort here, because if I get sloppy with the populations here, the whole number kind of falls apart. And I'd rather show you the careful version. So first, the dashboard view.

12:32So our stores Shopify returning customer rate, let's say it reads 40%. Now, remember what that means now. 40 % of the customers who ordered in this window had ordered sometime before. old customers resurfacing, and a real deliberate reorder who a customer chose to reorder from you are all mixed into that 40%. It's not wrong, but it is a blend. And now let's build the honest number separately. And notice, I'm not going to subtract one dashboard figure from another because they measure different things. We build the cohort from scratch. We pull a group of customers whose very first order was a one-time purchase, not a subscription.

13:19And we only include customers who've had a full 12 months to come back. So nobody's in here who just bought last week and hasn't had a fair chance. The maturity rule matters here. It's the same principle we use in episode two. So that gives us a clean cohort of let's say 8 ,000 one-time first customers. Now we ask one question of that group within 12 months of their first order, within 12 months, not all time, how many placed another one-time order? A real deliberate non-subscription second purchase. So in this example, that's 2 ,000 of them. 2 ,000 out of 8 ,000. So that's a 25 % elective second purchase rate.

14:12Okay. And now the critical thing, say that part slowly, the 40 did not become 25. Those two numbers were never the same thing. 40 % describes the mix of everyone who was reordering during that period. 25 % describes whether a specific group of first buyers made a deliberate second purchase within a year. One is a snapshot of a crowd. The other is the behavior of a specific cohort over time. And both are true. They just answer very different questions. And so here's the raw number that kind of stings a little bit, but it's clean because it comes straight out of the same cohort. Of those 8 ,000 one-time first customers, 2 ,000 came back, which means, you guessed it, 6 ,000 of them had a full year to return but didn't.

15:07Now that's your mature one and done count. Not they vanished last week. They had every chance and they just chose not to. Now, is 25 % good? Honestly, I can't give you a clean benchmark and I'm not going to make one up. That repeat numbers you see quoted around the internet, the 20 to 40 % ranges, those are all blended. A lot of them blended dashboards, first of all. So the numbers that stores report might not be right because the reporting, like I talked about earlier, on the three different blended types of repeat customers. And it's completely different for every vertical too. So almost nobody actually publishes a repeat rate with subscriptions stripped out and for a fixed cohort window, which is kind of the point of this whole episode.

15:58So for now, just don't compare yourself to some industry average report that's measuring something completely different. Compare this cohort to your last one and compare it to how often someone should naturally rebuy what you're selling. Coffee should be high. Mattresses should be low, and that's fine. Side note, this is actually the kind of exact number that we should publish at Bold to finally give this category of customer a true benchmark. Maybe we will. At the beginning of the show, I told you why everyone serious about their Shopify business should have their store backed up and protected with Rewind.

16:35There is no excuse not to. There literally is no undo button for Shopify. Shopify's own terms actually say that your data is 100 % your responsibility. Your products, your theme, your customizations, your settings, everything. They don't back up any of it. And no, a CSV export does not cover it. With CSV exports, there's no images, no meta fields, no themes, settings, etc. Nothing. I was talking to the people at Rewind about a brand where one team member actually ran a bulk update and accidentally overwrote 11 ,000 products. Orders, customers, contacts, all of it gone in a single action. Luckily though, with Rewind, it was a simple one-click rollback.

17:19It could be anything, a bad CSV import, a random app you just installed that messes everything up, or all of these AI tools that everyone's using to manage their store now. I have heard so many horror stories. Rewind just gives you peace of mind no matter what. If you don't have Rewind installed, you absolutely should have it. Go now and get it. Shopify 1 % dot com slash Rewind. You'll get an exclusive 30 days free on me. The link is also in the show notes. At the top of the show, I mentioned OmniSend can now talk to ChatGPT and Claude. And I want to tell you why that's even bigger than it sounds.

17:54So if you missed it, quick catch up. OmniSend is what I use for email and SMS on every Shopify store I work with, plus for this show as well. and you can now connect your AI, cloud, chat, GPT straight to your OmniSend account. Your data, your campaigns, your flows, everything. You open a chat and you ask, what should I focus on this week to make more money? And it will come back with real answers about your store, which flow is underperforming, which automation needs improvement, which customers are going quiet, what's missing, everything. My favorite part though is AI segments. I used to build these by hand, clicking through filters forever.

18:32Now I just type something like customers who bought twice, but ignored my last campaign and it just builds it. And anything it writes already sounds exactly like your brand because it pulls from all your previous emails from your website, your logo, your color, your voice, everything. I've been doing this for 15 years and this is the closest I've ever felt to having a full-time marketer sitting right beside me. I have a link for you in the show notes that will give you 30 % off for your first three months, or you can just use code J30 when you sign up, J-A-Y-3-0. If you're ready to migrate from Klaviyo to OmniSend like thousands of others, they will do everything for you.

19:07You just show up and all your campaigns and automations from Klaviyo will be set up and running in OmniSend, ready to go. And usually at 35 % less what you were paying Klaviyo.

19:21Okay, now let's kind of get into the tactical part here, how to actually get your number. And there's two ways to pull this. And they're not really beginner versus advanced. They're just two different comfort levels. So same destination. So path one, have Sidekick do it. And this is a great option. Sidekick is, hopefully you know, but if not, Shopify has built an AI assistant, little purple glasses icon up on your top admin. You should definitely be using Sidekick and playing with it. It's pretty powerful. Anyways, it's free on every plan. So anyone listening should be able to do this. And it can actually build this cohort report from just a plain English request.

20:00So you describe the report and it will build the query and any filters needed and actually run it. So I'm not going to read you a paragraph long prompt while you're driving. That's what the show notes are for, but I will have it pasted in there. And it is as well going to be in the scorecard PDF. So make sure you download that because the exact query to run is in there. Word for word. So you can just copy and paste it. But conceptually, you're asking Sidekick for one thing. A cohort of customers whose first order was a one-time purchase, who've had at least 12 months to return. Okay, I just want to pause here.

20:38What does that mean? Well, if your average reorder time is 30 days, then that should be back 13 months. If the average reorder time is 60 days, it should be back 14 days. So it means these customers have had enough time to reorder. So again, I'm going to start over. You're looking for a cohort of customers whose first order was a one-time purchase. Second thing, who've had at least 12 months to return to reorder. And you're asking how many of them placed another one-time order in that window? And what is the percentage? And here's the part I kind of really want you to hear because it's the difference between using AI well and kind of getting burned by it.

21:24don't just accept the number that sidekick gives you inspect the filters read the prompt make sure it's grouped by customer and not by order or by subscription contract make sure first order type is actually one time just sometimes it doesn't quite get it right so read the the query and read the filters when it shows you just make sure that that is all proper and also make sure that the window is fixed. So I've had sidekick like nail this and I've had it sometimes make kind of easy mistakes. So it generally gets it right, but check it. So just treat its first answer as a smart draft that you verify, not the final number that you screenshot.

22:08Okay. That habit will actually serve you all with any AI tool you ever use, not just sidekick, but in general, good practice. Okay, so then path number two, you can build the query yourself. So if you're comfortable in Shopify's QL editor, or maybe you just want to save this as a report that you rerun every quarter and you don't have to go to Sidekick, you can build the exact same cohort by hand. And the fields you're working with are the ones that flag a customer's first order type, whether an order is subscription or one time. Exact query text is going to be in the show notes. I've written it out so you can copy and paste it.

22:46But one kind of heads up here, those field names, they do get renamed by Shopify from time to time. So I don't know when you're listening to this, but if you're listening to this a year from now, that query you might not be able to copy and paste. But it'll be a very similar version of that query. But either way, if they do get renamed by Shopify, you can access the raw editor and it should predict which fields you need as you type them in. So if it throws an error, 90 % of the time, that's all it is. It's a renamed field. And the easiest fix, it's actually kind of funny, paste the broken query into Sidekick and just say, this error, can you fix it for me?

23:26So if that happens, let Sidekick fix it. The plain English path and the power user path are collapsing into each other very quickly. This is happening with a lot of things in life right now with AI. So either way, you land on the same two numbers. your elective second purchase rate and your mature one and done count. So now you're going to take out that scorecard that you printed, the PDF, and you're going to write them in there. There's a spot to write them, write them down. Keep this. This is going to be building out a very powerful audit for your store. Now, what do your numbers actually mean?

24:02So a number by itself doesn't tell you what to do. So before you kind of close that down, put your store on a simple grid. So two things, how strong your subscription base is and how strong your elective second purchase rate is. And that gives you, so we're going to picture like a four by four grid here. So it gives you four profiles, high subscription, high elective, and that's the dream. People happily auto replenish and your one-time buyers happily come by on their own. And if this is where you are, your job's done. Just don't break it. Or do you have high subscription but low elective? And this is a sneaky one.

24:47And this is actually the whole reason for this episode is your subscription engine looks great and revenue is fine. But if you strip that away, the rest of your customer profile barely repeats. And you're more dependent on people not canceling than you'd like to admit. A lot of people get in this situation. They have what they call gym membership subscriptions. They don't even want to message the customer. They don't even want to email the customer because they're afraid they might cancel. People aren't choosing to come to the gym and pay every month. They're just on a subscription that they forget to cancel or it's too much effort to cancel because it's not that expensive.

25:26That's not someone choosing every month to come and pay. So the work here is going to be building elective repeat outside of the subscription. So the business isn't the one thing kind of holding up the business. Okay. And then you're going to have another quadrant. And this is on that scorecard, by the way, on the PDF. There's a visual of this. But another quadrant is going to be low subscription, high elective. And this is your customers come back on their own without being locked into anything. And that's actually very healthy. And there might be a subscription opportunity here, but be careful.

26:01Forcing a subscription on people who are happily rebuying can actually annoy your best customers. Don't fix what's not broken. We work with a brand who is a perfect example of this. They are using our repeat app, which is an AI reorder agent that nudges people to reorder with a click. So not a subscription. People who buy things one time and just choose to come back. and they also have a subscription. The reorders through Repeat, R-E-P-E-T-E, the app, are four times what their new subscriptions are every month. So, and their LTV on those customers is higher. So the customers who choose to come back are actually spending more, they're buying more, and they're buying more often.

26:48They just don't want a subscription and that's totally fine. So that's actually a very healthy store. They're choosing to come back every month. And then the fourth quadrant is low subscription, low elective. Okay, this is the one that actually needs real attention and no shame if it's you because, well, at least now you actually know. And this is a true repeat commerce problem and it's usually one of four things. The product experience, the replenishment timing, reorder friction, or honestly just product market fit. And conveniently, those are basically what the next several episodes of this series are going to cover.