Summary

Shopify’s “First-Time” and “Returning” classifications do not always match how Triple Whale labels customers as “New” or “Returning.” In Triple Whale, every customer is classified based on whether the current order is their first purchase or a subsequent one, while Shopify categorizes customers into three groups: First-Time, Returning, and N/A (when it is unable to determine the status). As a result, Shopify calculates the Returning Customer Rate using only those customers it can confidently classify (excluding N/A), whereas Triple Whale calculates it using all customers. This difference in the denominator can lead to discrepancies between the two systems.

Why This Happens

Different Customer Identification Logic:
Triple Whale assigns every customer a binary label: “New” if it is their first order and “Returning” if not. Shopify, however, uses a matching process (typically based on email) and if it cannot match the customer’s first order date, it marks them as “N/A.”

Example Scenario

Imagine your store has 200 total orders in a given time frame. Shopify is able to classify 160 of these orders as either from a first-time or returning customer, leaving 40 as N/A. Out of the 160 classified orders:

First-Time Customer Orders: 100
Returning Customer Orders: 60

Shopify’s Returning Customer Percentage Calculation:

Returning Customer Percentage = Returning Customer Orders / (First-Time Customer Orders + Returning Customer Orders) = 60 / (100 + 60) = 60 / 160 ≈ 37.5%

Triple Whale’s Returning Customer Percentage Calculation:
Since Triple Whale classifies every customer as either new or returning, its denominator is the total number of orders:

Returning Customer Percentage = Returning Customer Orders / Total Orders = 60 / 200 = 30%

How This Affects Reporting

The discrepancy in classification can lead to differences in the reported new and returning customer metrics (e.g. New Customer Orders, Returning Customer Revenue, New Customers Percent, etc.). Shopify’s exclusion of “N/A” orders means that the percentage calculated by Shopify may appear higher than the one reported by Triple Whale. This is especially noticeable when a significant proportion of orders are classified as "N/A" by Shopify, but are still counted by Triple Whale as part of the total order base.

How to Interpret the Data Correctly

To correctly interpret the new and returning customer metrics between Shopify and Triple Whale, you need to keep in mind the difference in how customers are classified. While Shopify excludes orders marked as "N/A," Triple Whale includes all orders in its calculations, which can result in lower reported percentages. When comparing the two systems, ensure that the scope of the data (i.e., the denominator) is considered, and focus on trends over time rather than a direct comparison of the numbers.

By understanding that Triple Whale includes every order in its calculation while Shopify excludes N/A orders, you can reconcile the differences between the two systems and use these metrics effectively for customer retention analysis.