How to Calculate Refund rate in Google Analytics

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If you're involved in e-commerce, you know that one of the biggest challenges is managing refunds. Not only can refunds damage your financials, but they can also hurt your reputation and impact customer loyalty. Fortunately, with Google Analytics, you can better understand your refund rate and take steps to reduce it. In this article, we’ll dive deeper into the subject and show you how to calculate refund rate in Google Analytics.

Understanding Refund Rate in E-commerce

Before we go into the specifics of calculating refund rate, it’s important to understand what it actually means. Refund rate, also known as the return rate, is the percentage of orders that were returned by customers. This metric is important because it helps you gauge how well your products are meeting your customers' expectations, and it provides insights into areas where you may need to improve.

What is Refund Rate?

Refund rate is a metric that is calculated by dividing the number of refunded orders by the total number of orders. For example, if you had 100 orders last month and 5 of those orders were refunded, your refund rate for that month would be 5%.

Why is Refund Rate Important?

As mentioned earlier, your refund rate can provide valuable insights into the quality of your products and the level of customer satisfaction. A high refund rate can indicate that there are issues with your product descriptions, or that your delivery process isn't meeting customer expectations. By analyzing your refund rate data, you can improve your product offerings and reduce customer churn.

Another reason why refund rate is important is because it can have a significant impact on your bottom line. Every refund that you issue is money that you're losing, and if your refund rate is consistently high, it can eat into your profits. By keeping your refund rate low, you can ensure that you're maximizing your revenue and keeping your business profitable.

It's also worth noting that refund rate can vary widely depending on the industry that you're in. For example, if you're selling clothing online, you may have a higher refund rate than if you're selling electronics. This is because clothing can be difficult to size correctly, and customers may need to return items more often to get the right fit. Understanding the typical refund rate for your industry can help you set realistic expectations and identify areas where you may need to improve.

Finally, it's important to remember that refund rate is just one metric that you should be tracking in your e-commerce business. While it can provide valuable insights, it's not the only factor that affects customer satisfaction and loyalty. By tracking other metrics like customer reviews, repeat purchase rate, and average order value, you can get a more comprehensive view of how your business is performing and what areas you need to focus on to improve.

Setting Up Google Analytics for E-commerce Tracking

In order to get accurate refund rate data in Google Analytics, you first need to ensure that you have e-commerce tracking enabled on your website. This will allow you to track purchase activity, including refunds. Here’s how to set it up:

Enabling E-commerce Tracking in Google Analytics

To enable e-commerce tracking in Google Analytics, go to your Google Analytics account and navigate to Admin > View > E-commerce Settings. Toggle on the “Enable E-commerce” option and click “Next Step." From there, you can customize your tracking settings to match your website's checkout process.

Enabling e-commerce tracking in Google Analytics is a crucial step for any online business that wants to maximize its sales and profits. With e-commerce tracking, you can gain valuable insights into your customers' purchasing behavior, including what products they buy, how much they spend, and how often they return to your site to make additional purchases.

By analyzing this data, you can identify trends and patterns that can help you optimize your website and marketing campaigns for better results. For example, if you notice that a particular product has a high refund rate, you can investigate why that might be and take steps to improve the product or its presentation on your website.

Adding E-commerce Data to Your Website

Once you’ve enabled e-commerce tracking in Google Analytics, you need to add the necessary tracking code to your website's checkout pages. The code will collect purchase data, including refund information, and send it to Google Analytics for analysis. You can consult your website developer or refer to Google’s developer documentation to get the code added correctly.

Adding e-commerce data to your website can be a complex process, but it's well worth the effort. By accurately tracking purchase activity, you can gain a deeper understanding of your customers' behavior and preferences, and use that knowledge to improve your online business. You can also use the data to create targeted marketing campaigns that are more likely to convert visitors into customers.

Overall, setting up e-commerce tracking in Google Analytics is an essential step for any online business that wants to succeed in today's competitive marketplace. With accurate data and insights, you can make informed decisions that drive growth and profitability over the long term.

Calculating Refund Rate in Google Analytics

Now that your website is set up with e-commerce tracking and the tracking code, you can easily access refund rate data in Google Analytics. Here are a few ways to do it:

Locating Refund Data in Google Analytics

Refund data can be found under Conversions > E-commerce > Sales Performance in your Google Analytics account. Here, you can see reports that list your transactions and refunds for any given period, as well as other metrics such as revenue and conversion rates. To view your refund rate, you simply divide the total number of refunds by the total number of transactions and multiply by 100.

Using Google Analytics' Built-in Refund Rate Calculation

Google Analytics also has a built-in function called the “Refunds and Returns Report” that automatically calculates and displays your refund rate for any given period. The report is accessible under Conversions > E-commerce > Refunds and Returns.

Customizing Your Refund Rate Calculation

If you prefer to customize your refund rate calculation, you can set up a custom report in Google Analytics. This will allow you to create a report that compares refund rate across different products, categories, and time periods. You can also apply filters to exclude certain types of transactions, such as those that were cancelled rather than refunded.

Analyzing Refund Rate Data

Once you have your refund rate data in Google Analytics, the next step is to analyze it and draw insights that can help you improve your e-commerce strategy. Here are some key areas to focus on:

Identifying Trends and Patterns

Look for patterns in your refund rate data. Are there specific products or categories with higher refund rates? If so, what could be causing the issue? Identifying patterns can help you address the root causes of high refund rates.

Comparing Refund Rates Across Products and Categories

Comparing refund rates across products and categories can help you pinpoint which areas of your e-commerce strategy need improvement. For example, you may find that your refund rate is higher for certain product types, meaning you may need to invest in better quality control processes or provide more detailed product information.

Assessing the Impact of Refunds on Revenue and Profitability

Refunds can be costly for e-commerce businesses, so it’s important to understand the financial impact they’re having on your bottom line. By measuring the revenue and profitability impact of refunds, you can decide on the most effective strategies to reduce them.

Reducing Refund Rates and Improving Customer Satisfaction

Reducing refund rates should be a priority for any e-commerce business looking to maximize revenue and ensure customer satisfaction. Here are some strategies to consider:

Evaluating Product Quality and Descriptions

Ensure that your products meet or exceed expectations. Consider investing in better quality control processes to prevent issues that may lead to refunds. Additionally, make sure that your product descriptions are detailed and accurate, as this can help set customer expectations.

Enhancing Customer Support and Communication

Improving customer support and communication can help reduce refund rates by increasing customer satisfaction. Consider providing a clear return policy and a simple, easy-to-use returns process. Additionally, ensure that your customer service team is trained to handle refund requests promptly and professionally.

Streamlining the Returns Process

A complicated or time-consuming returns process can lead to frustrated customers and increased refund rates. Streamline the process by making it as easy as possible for customers to return products. Consider using a returns management software or partnering with a logistics provider that specializes in e-commerce returns.


Calculating refund rate in Google Analytics is an important step towards understanding the quality of your e-commerce products and finding ways to improve customer experience. By leveraging the data provided by Google Analytics, you can gain insights into which products, categories, and areas of your business need improvement, and implement effective strategies to reduce refunds and boost customer satisfaction.

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