Retained revenue is one of the most important metrics for sustainable growth. The more revenue you keep from existing sales (rather than losing it to refunds), the stronger your bottom line.
This guide outlines practical strategies to help you increase retained revenue and transform your returns process into a driver of growth.
Retained Revenue Ratio
Retained revenue ratio is a key performance indicator (KPI) that shows how much revenue your business keeps when customers make returns.
Instead of losing money through refunds, some returns can be turned into exchanges or store credit. The retained revenue ratio measures the percentage of revenue that is saved in this way.
High ratio: Means you’re successfully encouraging customers to exchange or accept store credit rather than requesting a refund. This keeps more money in the business.
Low ratio: Means most returns are resulting in refunds, so more revenue is being lost.
Benchmarks
Fast fashion: ~5%
Regular fashion: 10–15%
Store credit: 3–5%
Anything above these levels is considered strong performance.
Why it matters
A higher retained revenue ratio means more money stays within your company.
It highlights how effective your returns process is at protecting revenue.
Tracking this KPI helps spot opportunities to improve by nudging customers toward exchanges or store credit instead of refunds.
Boost Exchanges
Encouraging exchanges instead of refunds is one of the simplest ways to retain revenue. By making the process smooth and flexible, you give customers a reason to keep shopping with you rather than taking their money elsewhere.
1. Offer Seamless Exchanges
Customers are far more likely to exchange an item if the process is quick, simple, and appealing. A seamless exchange experience can turn a potential refund into repeat business.
“Seamless” can mean:
Offering free domestic exchanges
Clear, upfront policies
Why it matters
The easier and more attractive the process, the more likely customers will choose an exchange over a refund.
A smooth exchange builds trust and strengthens long-term loyalty.
Pro tip
Many brands now charge for returns but ship exchange orders free of charge. This covers part of your costs while creating a strong incentive to exchange — a win-win.
Action step
Adjust your exchange fees and update your entry portal text to align with your exchange policies.
2. Activate All Exchange Options
Providing flexible options, such as like-for-like (variant) exchanges and exchanging for different items (Shop Now), can open up more options for customers to find a product they truly want, reducing the likelihood of a refund.
You can activate these options in Returns > Settings > Exchange Experience.
Option 1: Like-for-like exchanges
Customers can swap for the same product in a different colour, material, or size. This requires proper setup in Shopify and activation in Swap’s backend.
Option 2: Exchange for another or multiple products
Customers can choose a completely different product, or even exchange one item for multiple. This is enabled via the Shop Now function in the portal settings, which directs customers back to your website (in-store experience) or the Swap portal. You can choose to add bonus credit to Shop Now to incentivise customers to exchange instead of refund.
Why it works
More flexibility gives customers more reasons to exchange instead of refund.
Customers are more likely to stay if they know they can shop for something they genuinely like.
How to implement
In Swap, go to Returns > Settings > Exchange Experience and activate both options.
In Shopify, make sure product variants are set up correctly to support size or colour exchanges.
Avoid restricting credit when customers select different items. Allowing higher-priced alternatives often increases total spending.
3. Update Your Exchange Messaging
If you offer free exchanges in the UK, or ship out exchange orders at no additional cost, make sure this is clearly highlighted in your returns portal. Clear messaging increases the likelihood that customers choose an exchange instead of a refund.
You can update your exchange messaging in:
Design → Continue Editing
Click Next until you reach the relevant screen, then update the main text by clicking the pencil to reflect your exchange policy.
Examples of portal text
Free exchanges in the UK
Exchanges are shipped at no additional cost
Highlighting these benefits makes the exchange option more attractive and reduces refund selection.
Boost Store Credit
Store credit (also known as “Shop Later”) is another effective tool for keeping revenue in your business. By making it attractive and rewarding, you encourage customers to shop again and strengthen brand loyalty.
1. Update Your Store Credit Messaging
Clear and engaging messaging helps customers see store credit as a better option than refunds. Adjusting your text is a simple but effective way to boost uptake.
You can update the main text and subtext in Design > Continue Editing.
Use "Next" until you reach the Credit screen and click the pencil next to the credit message to edit the text.
Examples of main text
Get 10% extra credit
Enjoy 10% more store credit
Free 10% bonus credit
Examples of subtext
Free returns + 10% bonus credit with a gift card code for later use
Free returns when you opt for store credit (applied once the return is received)
Take 10% more store credit & get free return shipping (applied once the return is received)
Framing store credit this way increases its perceived value and encourages customers to choose it over a refund.
2. Encourage Store Credit with a Bonus
Adding a bonus on top of store credit gives customers a strong reason to pick this option. Even a small extra percentage can significantly increase the number of people choosing store credit.
Bonuses above 10% typically deliver a noticeable uplift in store credit usage.
Customers using store credit usually spend 20–30% more than the credit amount, increasing average order value (AOV).
How to implement
Go to Settings → Returns → Shop credit bonus
Tip
Start small, measure results, and scale up what works. Offering a bonus makes store credit more compelling, which in turn drives loyalty and retention.
Example
Examples from real brands help demonstrate the impact of store credit. One of Swap’s merchants boosted retained revenue by 67% after switching their store credit to Swap.
Reduce Returns Using Data
Understanding why customers are returning items is key to reducing return rates. With the right insights, you can fix problems at the source and avoid repeat issues.
Analyse and Understand Return Reasons
Return reasons give you valuable data about customer behaviour. By reviewing them regularly, you can identify common themes and address them proactively.
How to find your top return reasons
Go to Returns > Analytics > Return Reasons.
Review the most common reasons over a selected time period.
Look for recurring patterns or spikes that highlight issues.
Example
One Swap merchant saw frequent returns labelled “too big.” They updated product descriptions to include the word oversized and added fit guidance. As a result, return rates dropped, so retained revenue increased, and overall customer satisfaction improved.
Optimise Shipping Carriers & Charges
Shipping is a major part of the returns experience. By choosing the right carriers and setting fair fees, you can reduce costs while still keeping customers happy.
Swap provides access to a trusted network of domestic and international carriers such as Royal Mail, DPD, and FedEx.
Best practices for setup
Free exchanges or store credit → encourages repeat purchases
Flat or tiered return fees → helps recover shipping costs fairly
High-value returns (£100+) → use premium carriers with advanced rules for added peace of mind. These can all be set up on Swap’s portal.