Customer retention calculator. Australia
Customer retention calculator: repeat orders, CAC payback and profit
For an online store, customer retention is how many of the customers you win come back to order again, how soon they come back and how often they keep ordering. When you buy those customers with paid ads, it decides how soon they pay back what they cost to acquire, if they pay back at all.
Enter your traffic, conversion rate, order value, cost to acquire a customer (CAC), margin and retention numbers below. Then move four levers to see what faster second orders, cheaper acquisition, a higher repeat rate and more returning customers are worth over 12, 24 or 36 months. Free, in Australian dollars, no signup.
How the retention forecast works
The calculator follows the new customers you win each month and counts every order they place across the forecast window. It is a planning model built from eight numbers, so every result traces back to an input you can check. The maths runs in your browser and your figures stay there.
New customers and what they cost
Acquisition cost a month = new customers × CAC
CAC is your all-in cost to acquire a customer. The same number of new customers arrives every month, and each one costs the same amount to win.
Second orders
We don't assume every returning customer comes back on the same day. Second orders cluster around your average days to second order, with some arriving sooner and a tail arriving later, and first orders land evenly through the month a customer was won. For the technically minded, the wait follows a gamma curve with shape 2 and your average as its mean. A second order that lands after the end of your forecast window doesn't count towards it, which is why a 36-month view can look quite different from a 12-month one.
Repeat orders
Once a customer has come back, we count them as a returning customer for the rest of the forecast, and each month the share you enter as your monthly repeat rate orders again. If your returning customers drift away over time, use a lower monthly repeat rate, especially for 24-month and 36-month views.
Profit after acquisition
Gross profit = revenue × gross margin
Profit after acquisition = gross profit - acquisition cost
Profit after acquisition is what your new customers leave behind once they have paid for themselves, before overheads and tax. It shows whether the customers you are buying earn back more than they cost. It doesn't include what it costs to bring customers back, such as retargeting spend, second-order offers or email and SMS tools, so weigh any gain against that cost.
Payback month
Payback is an average across all your new customers. Customers who never come back don't pay back on their own, and the ones who do come back more than make up for them. Month 1 means the average new customer has paid back within the month you won them. We look up to five years ahead, and if the average customer still hasn't paid back by then, the calculator tells you.
The four levers change only days to second order, CAC, monthly repeat rate and returning customer rate. Sessions, conversion rate, order value and margin stay at today's values, so every difference between today and your forecast comes from those four changes.
The forecast follows only the new customers you win from month 1. Revenue from the customers you already have sits on top of it, so the totals will be lower than your store's real revenue. That is deliberate: it shows what retention does for the customers you are paying to acquire now.
Where to find each of the eight inputs
You can work out all eight from your web analytics, an order export, your product costs and your ad accounts. Use a normal recent month rather than a sale month, and keep every dollar figure on the same GST basis, either all including GST or all excluding it.
| Input | What it means | How to find it |
|---|---|---|
| Monthly sessions | Visits to your store in a normal month. | Your web analytics or your store platform's traffic report. Pick a month without a big sale or launch in it. |
| Conversion rate | The share of sessions that place a first order. | Orders from new customers divided by sessions in the same month. An all-orders conversion rate will overstate it, because it also counts returning customers. |
| Average order value | Revenue per order. | Revenue divided by orders for the same month. The calculator uses one order value for first and returning orders, so use your overall average. |
| Cost to acquire a customer (CAC) | Your all-in cost to win one new customer. | Everything you spent to win new customers in a month (ad spend, agency or management fees and creative production) divided by the new customers you won that month. It can differ from the cost per purchase in your ad account, because that figure can include returning buyers, leaves out fees and creative, and only counts the orders the platform can attribute. |
| Gross margin | The share of each order's revenue left after product cost, shipping, packaging and payment fees. | Revenue minus those four costs, divided by revenue. That makes it closer to a contribution margin than the gross margin on your profit and loss statement. Our COGS calculator works out both. |
| Returning customer rate | The share of first-time customers who ever come back for a second order. | Take the customers who placed their first order 12 to 18 months ago and count how many have ordered again since. Divide the second number by the first. An older group gives slower customers time to come back, so the rate isn't understated. |
| Days to second order | The average wait between a customer's first and second order. | In an order export, find each customer's first and second order dates. For every customer with a second order, take the gap in days, then average them. Use the same group of customers as your returning customer rate. |
| Monthly repeat rate | Once customers are back, the share who order again in a given month. | Count the customers who had already placed two or more orders before a normal recent month began, then how many of them ordered during that month. Divide the second number by the first. |
Not sure of a number? Enter your best estimate, then move it up and down. If the result barely changes, it isn't worth chasing. If it swings the answer, pull the real figure before you make a decision on it.
Worked example: what four changes are worth
Every figure in this example is invented. These are the starting numbers the calculator loads with, chosen to make the maths easy to follow. They are not our clients' numbers, not an industry benchmark and not a target to aim for. Put your own numbers into the calculator above.
The inputs
| Input | Today | With changes |
|---|---|---|
| Monthly sessions | 40,000 | 40,000 |
| Conversion rate | 1.8% | 1.8% |
| Average order value | $95 | $95 |
| Gross margin | 55% | 55% |
| Cost to acquire a customer (CAC) | $65 | $58 |
| Returning customer rate | 25% | 28% |
| Days to second order | 75 days | 55 days |
| Monthly repeat rate | 10% | 12% |
Only the four retention and acquisition numbers change. Traffic, conversion rate, order value and margin stay exactly the same.
The results over 12 months
| Result | Today | With changes |
|---|---|---|
| New customers a month | 720 | 720 |
| Gross profit on a first order | $52.25 | $52.25 |
| First-order gross profit compared with CAC | -$12.75 | -$5.75 |
| Revenue, 12 months | $1,056,211 | $1,125,766 |
| Gross profit, 12 months | $580,916 | $619,171 |
| Acquisition cost, 12 months | $561,600 | $501,120 |
| Profit after acquisition, 12 months | $19,316 | $118,051 |
| Average new customer pays back | Month 5 | Month 2 |
| Returning orders in month 12 | 334 | 424 |
| Share of month 12 revenue from returning orders | 32% | 37% |
Profit after acquisition rises by $98,735 over the year. $60,480 of that is the lower CAC: 720 new customers a month for 12 months at $7 less each. The other $38,255 is extra gross profit from more customers coming back, sooner, and more of them ordering again once they do.
Payback moves from month 5 to month 2. The lower CAC shrinks the gap the first order leaves from $12.75 to $5.75, and the earlier, larger wave of second orders closes it sooner.
Because the forecast starts with no returning customers, returning orders build up month by month. By month 12 they bring in 32 per cent of that month's revenue today and 37 per cent with the changes. A 24-month or 36-month view shows more of that build.
Each change on its own
| Change | Profit after acquisition, 12 months | Compared with today | Average payback |
|---|---|---|---|
| Today, no changes | $19,316 | No change | Month 5 |
| Days to second order, 75 to 55 days | $30,618 | +$11,302 | Month 4 |
| CAC, $65 to $58 | $79,796 | +$60,480 | Month 3 |
| Monthly repeat rate, 10% to 12% | $27,273 | +$7,957 | Month 5 |
| Returning customer rate, 25% to 28% | $34,853 | +$15,537 | Month 4 |
| All four changes together | $118,051 | +$98,735 | Month 2 |
Added up one at a time, the four changes are worth $95,276. Together they are worth $98,735, because the retention changes build on each other: more customers come back, they come back sooner, and more of them keep ordering inside the year.
In these invented numbers the CAC change is the biggest single lever. That is a feature of this example, not a rule, and your own numbers may rank the four differently.
Why the second order matters when you buy customers with ads
Every customer you win with paid ads costs you money before they spend any. You pay the acquisition cost up front and their orders pay it back over time, so the first question is whether the first order alone is enough.
If that is equal to or more than your CAC, a new customer pays back on the first order and every returning order is profit on top. If it is less, only returning orders can close the gap, and your payback depends on how many customers come back and how soon.
In the worked example, the first order earns $52.25 of gross profit against a $65 CAC, so every new customer starts $12.75 short. Returning orders are the only thing that closes that gap.
Speed changes cash flow
Two stores with the same returning customer rate can be in very different cash positions. The store whose customers come back sooner gets its acquisition money back sooner, and can put it back into ads. In the worked example, bringing the average second order forward from 75 to 55 days, with nothing else changed, lifts 12-month profit after acquisition by $11,302 and brings payback forward from month 5 to month 4.
Why first-order ROAS can mislead
Ad platforms credit a campaign with the orders they can attribute within a set window after someone clicks or views an ad. A second order placed months later may fall outside that window and not be credited to the campaign at all. So a campaign that looks marginal on first-order ROAS can still be profitable once returning orders are counted, and one that looks fine can still lose money if its ROAS target was set on revenue rather than gross profit, or if the platform credits it with orders from customers who were already coming back.
That is why payback month belongs alongside ROAS when you set targets. If your first order is well short of CAC, a bigger first order is another way to close the gap, and our AOV and CVR scenario planner shows what lifting order value or conversion rate does for the same store. For the margin side, our COGS calculator works out gross margin, contribution margin and break-even ROAS.
Ways to bring customers back sooner
These are practical places to start when your payback depends on the second order. None of them comes with a guaranteed result, so test each one and measure it against your own numbers.
- Time post-purchase email and SMS to your repurchase window. Use your own days to second order rather than a generic sequence. A reminder that lands shortly before most customers would reorder anyway is more useful than one sent the day after delivery. For products that get used up, time it to when they are likely to run low.
- Give people a reason to place the second order. A small incentive on the next purchase, a sample of a complementary product or early access to a new range, sent with or after the first order. Check any discount against your margin first, because the second order still has to earn gross profit to pay back CAC.
- Retarget recent first-time buyers. Keep a small, separate audience of customers who bought for the first time within your repurchase window, and show them what customers usually buy next. Keeping it apart from prospecting lets you see what each returning order costs.
- Exclude recent buyers from prospecting. Prospecting campaigns are there to find new customers. Excluding people who bought recently keeps that spend on new customers and protects the CAC this calculator runs on. It also means your prospecting results aren't flattered by orders from people who were already coming back.
- Make reordering easy. Saved details, a clear reorder link in your shipping emails and, for products people use up, a subscription option all remove small reasons not to come back.
- Measure each month's new customers separately. Track returning customer rate and days to second order for each month's new customers, rather than one store-wide repeat rate, so you can see whether a change moved the customers it was aimed at. Then put the new numbers back into the calculator.
Running a clinic or service business rather than an online store? Our service business LTV calculator is built for you. The rest of our calculators and planners are on the free tools page.
If you would like help running your Meta and Google ads around your payback and retention numbers, get started.
Customer retention calculator FAQ
How do I calculate ecommerce customer retention rate?
For an online store, the most useful version is your returning customer rate. Take the customers who placed their first order in a set period, count how many have ordered again since, and divide the second number by the first. Use a group old enough to have had time to come back, for example customers who first ordered 12 to 18 months ago, and work it out for each group separately so you can see whether it is improving. The classic retention formula (customers at the end of a period minus new customers, divided by customers at the start) suits subscriptions better. In a store, customers don't cancel. They just stop ordering.
What is a good returning customer rate?
There is no universal benchmark worth planning around. The right rate depends on what you sell and how often people need it: a store selling products that get used up and reordered should expect more customers to come back than one selling mattresses or winter coats. Compare against your own history, check whether each new group of customers comes back at a higher rate than the last, and judge it against your product's natural buying cycle.
What is CAC payback?
CAC payback is how long it takes for the gross profit from a new customer's orders to cover what it cost to acquire them. If your first order earns at least as much gross profit as your CAC, you pay back straight away. If it earns less, payback depends on returning orders, and the calculator shows the month the average new customer crosses the line, today and with your changes.
How do I calculate ecommerce customer lifetime value (LTV)?
A simple version is average order value multiplied by gross margin, multiplied by the average number of orders per customer over a set window. Use gross profit rather than revenue, because gross profit is what pays back acquisition cost. Use a fixed window, such as 12 or 24 months, instead of an open-ended lifetime, so the number is something you can check against real customers. The calculator shows gross profit per customer over their first 12 months, today and with your changes.
Why does time to second order matter if customers come back eventually?
Because cash has a timeline. If you pay for a customer today and their second order arrives two months later, they pay back sooner than a customer whose second order arrives six months later, even if both come back in the end. Faster second orders mean less of your money is tied up in customers who haven't paid back yet, and more of those orders land inside the forecast window.
Why does the calculator use gross margin instead of revenue?
Revenue includes money that was never yours to keep: the cost of the product, shipping, packaging and payment fees. Acquisition cost has to be paid back out of what is left, so the calculator multiplies every order by your gross margin before comparing it with CAC. For example, a customer whose orders add up to 200 dollars at a 50 per cent gross margin has earned you 100 dollars towards their acquisition cost, not 200.
Does the forecast include my existing customers?
No. The forecast follows only the new customers you win from month 1. Revenue from the customers you already have sits on top of it, so the totals will be lower than your store's real revenue. That is deliberate, because it shows what retention does for the customers you are paying to acquire now.
Is this a guaranteed forecast?
No. It is a planning model that shows what your numbers imply if they hold steady. Real stores have seasons, sales, stock-outs and changing ad costs, and the model includes none of them. It also counts customers who have come back as returning for the whole forecast, and it doesn't include what it costs to bring them back. Use it to compare scenarios and decide what is worth testing, then check the results against your actual customers month by month.