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RC CM2 % is the share of repeat-order revenue left after every per-order cost. It’s the most you can spend on retention, as a share of what returning customers buy, before repeat orders stop making money.

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Formula

RC CM2 % = ( RC CM2 ÷ RC Net Revenue ) × 100

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Formula Components

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How It Works

Upstack sums RC CM2 and RC net revenue across the range, using only returning orders: every order from a Shopify customer except their earliest non-cancelled one. It then divides once. All the costs in it are stored on each order when the order is processed. No ad spend or recurring expense is involved, which makes RC CM2 % the last margin rate where new and returning customers are measured on exactly the same cost basis. From CM3 on, Upstack charges total ad spend to each segment.

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Example

Fulfillment and payment fees take 13 points between RC CM1 % and RC CM2 %.

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How to Interpret It

Use RC CM2 % as a ceiling for retention costs. If loyalty software, SMS, and win-back ads together run 12% of RC net revenue, an RC CM2 % of 50% covers them with 38 points to spare. If the store adds free shipping for loyalty members and shipping cost goes from 7% to 12% of RC revenue, RC CM2 % drops to 45%.
  • Below NC CM2 % usually traces to loyalty perks (free shipping, gifts, deeper discounts) that cost more than the welcome offer.
  • Falling while RC CM1 % holds points to fulfillment: smaller replenishment orders spread fixed per-order costs over less revenue.

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Common Pitfalls

  • Shipping mode. With Use Shopify Shipping Charges, free-shipping orders carry zero shipping cost. Loyalty free shipping then makes RC CM2 % look better than your carrier invoices. Use Fixed Rate Per Order or Shipping Profiles in Cost settings for a realistic cost.
  • Gateway percentages apply to the full order total, including shipping and tax, not only product revenue.

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FAQ

As a share of returning revenue, up to RC CM2 % before repeat orders lose money on a variable basis. In practice you want room left for overhead, so set a target below it.
RC CM3 % subtracts your total ad spend, including prospecting, so it mixes acquisition costs into a retention view. RC CM2 % keeps the comparison clean.
See all Contribution Margin metrics →