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Returning Customer Marketing Cost is the non-ad marketing cost Upstack subtracts from returning customer margin at CM3: per-order marketing fees on repeat orders, plus a net revenue share of your recurring and variable marketing costs. Ad spend is counted separately.

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Formula

RC Marketing Cost = Marketing order fees on returning orders + returning customer share of Marketing Recurring expenses (prorated) and Marketing Variable costs (% of ad spend)

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Formula Components

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How It Works

Marketing order fees are calculated on each order and stored with it. Upstack counts them here when the order is a returning order, meaning any order from a Shopify customer after their earliest non-cancelled one. Recurring expenses and Variable costs aren’t tied to orders. Marketing Cost gets their full amount. RC Marketing Cost gets a share in proportion to returning customers’ net revenue for the same date (and the same breakdown values, if you split the report by a dimension), and NC Marketing Cost gets the rest. See how the split works. Ad spend from your connected platforms isn’t part of this metric. RC CM3 subtracts it separately, in full.

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Example

A 30-day month. The store’s loyalty app charges 1.5% of net sales, it pays $1,200 Monthly for SMS, and its Facebook agency takes 10% of Facebook Ads spend ($40,000), entered as a Marketing variable cost. Net revenue was $63,000 from new customers and $147,000 from returning customers, so returning customers carry 70% of the SMS and agency costs ($147,000 ÷ $210,000). Only the $2,205 loyalty fee is specific to returning orders.

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How to Interpret It

Split it into its parts before drawing conclusions. The order-fee part is true retention cost: it rises when repeat sales rise. The recurring and variable parts are shared costs, split by revenue mix. They grow in RC Marketing Cost when returning customers bring in a bigger share of revenue, even if the costs themselves don’t change. Compare the order-fee part with RC CM2 %. A loyalty app taking 1.5% of repeat sales from a 50% variable margin leaves plenty of room. It earns its keep only if it lifts repeat purchase frequency enough to cover that cost; otherwise it is a pure margin cost.

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Common Pitfalls

  • NC + RC equals the total. In the example $2,505 + $5,845 = $8,350, the same as Marketing Cost.
  • No ad spend here. If you expected Facebook or Google spend, look at Blended Spend.
  • Per-order and percentage CM3 metrics (RC CM3 %, RC CM3 per Order) include only the order-fee part.

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FAQ

Enter retention tools as Marketing order fees, for example % of Net Sales, so their cost lands on orders. Upstack can then segment them by customer type. Recurring and variable costs are always split by net revenue.
Your choice. Tag it Marketing to have it reduce CM3 alongside ad spend, or Opex to keep it out of CM3 and deduct it at CM4.
See all Contribution Margin metrics →