Customer retention plays a central role in the profitability and growth of the brand. Nowadays, companies need to provide outstanding customer service to meet the audience’s high standards. Putting the customer as a top priority is the only way to ensure retention and loyalty.
However, customer retention statistics show how satisfying existing customers is becoming more challenging. Consumers have gotten more demanding, and they won’t hesitate to drop a brand if they receive poor customer service. In addition, most consumers leave bad reviews and criticism on social media due to their experience with the brand.
The following statistics will help you understand why customer retention is essential for businesses.
Top Customer Retention Stats: Editor’s Choice
- Lack of customer value causes brands to lose more than $136 billion per year.
- Repeat customers are 33% more likely to spend than new customers.
- Nearly 55% of customers buy at least four times before committing to a brand.
- The improved services are responsible for making 63% of consumers share their data.
- A good 62% of buyers share their negative experiences.
- American Express offers a 5% cashback for customer retention.
General Customer Retention Facts
As buyers have become more demanding with time, customer retention has been quite challenging for many companies. The following statistics will give you a better understanding of buyers’ habits and the importance of customer loyalty.
1. Not valuing customers causes a loss of over $136 billion per year.
Most companies do not value or listen to their customers when facing an issue, which costs them an enormous monetary loss. Customer service statistics demonstrate that, for this reason, 85% of buyers switched to the competition 1.81 times in the last 12 months. It’s important to ask customers for feedback as they can bring growth to the company.
2. In 2017, more than 50% of US customers abandoned a business because of bad service.
Additionally, customer retention statistics for 2020 show that roughly 33% of people switch to a competitor after only one bad experience. However, about 70% of these customers are willing to go back to the previous business in case of improvement. Customer service is vital if companies want their customers to keep purchasing from them.
3. Acquiring a new customer is five times more expensive than retaining an existing one.
Customer retention vs customer acquisition statistics say that 82% of companies agree that retaining a customer is cheaper than acquiring a new one. Yet, most brands tend to focus on attracting new buyers and neglect their existing ones. For a company, repeat buyers are the most profitable, and retaining them should be the topmost priority.
4. A 5% boost in customer retention can increase profits by 25% to 95%.
Investing in retention is among the best customer retention strategies that businesses can adopt to improve their gains. Companies mostly believe that acquisition is more profitable, while it’s the other way around. Existing customers bring the most income to the company as they build a relationship based on loyalty.
5. Repeat customers spend 33% more than newer customers.
According to customer experience statistics, an existing client spends the same amount of money in six months that a new client does in 18 months. Therefore, focusing on brand loyalty guarantees the most loyal customers to spend at least three times more than the average client.
6. Nearly 77% of customers are loyal to brands for over 10 years.
Brand loyalty statistics suggest that buyers like to stick with a specific company for a long time. If brands can meet and, possibly, surpass the customers’ demands, they can build a lifetime relationship. Additionally, the consumer can refer the positive experiences with the brand to family members and friends.
7. Around 55% of shoppers make around four purchases before becoming loyal to a brand.
Repeat customer statistics show that about 37% of buyers will be loyal to a brand after five purchases. Nevertheless, it can be challenging to reach this goal since clients expect outstanding customer support, special offers, and free shipping.
8. Consumers that engage with their brands emotionally have a 306% higher lifetime value.
As customer retention stats reveal, customers who feel emotionally attached to brands give more profit to companies. They guarantee long-life loyalty to the brand and, ultimately, convince other people to buy from it.
Customer Retention Statistics: What Buyers Think?
How does customer retention affect your business? What is a loyalty program? How do negative experiences impact your brand? Find all about it in the statistics and facts below.
9. Companies gain 80% in revenue from just 20% of their customers.
According to the 80/20 Pareto’s principle, businesses can focus on the top 20% of their customers and increase their sales by 80%. Customer retention statistics for 2021 show that, by studying 20% of consumers, a bigger audience will purchase.
10. 63% of consumers are open to sharing personal data for better services.
Businesses need private data to provide personalized content for customers. As customer satisfaction statistics suggest, more customers will be willing to share personal information with the brand in case of improvement. If used correctly, collecting data is an essential process that brands use to build a closer relationship with their buyers.
11. For most industries, the average customer retention rate is below 20%.
When brands dedicate their time and assets to improve retention, customers will keep being loyal to them. According to the latest report conducted by MixPanel, the average customer retention rate by industry statistics indicate that in the media and finance industry, the retention rate of over 25% is elite while for the SaaS and ecommerce industry, 35% is above average.
12. In 2020, 87% of consumers said that brands should have a loyalty program.
Loyalty program statistics for 2020 suggest that having a loyalty program attracts more customers and convinces them to stay with the brand instead of turning to the competitors. Memberships need to meet the majority of customers’ interests and solve their issues. This way, brands can guarantee a long-life relationship with consumers.
13. 92% of B2B buyers purchase a product based on positive reviews.
B2B customer retention statistics show that reviews can have quite an impact on potential customers. The majority of people reported that consumers’ opinions influenced their purchasing decisions—one bad review can bring an enormous loss for the company.
14. 62% of customers share their bad experiences with other people.
Statistics on the importance of customer retention say that most unhappy customers tend to speak up about their experiences with other people. However, negative reviews can end up damaging the company’s income and reputation.
15. Companies can reduce customer churn by 67% if they manage to solve problems right away.
Customer churn has been a nuisance for most companies. Generally, a high customer turnover rate can ruin the company’s profitability, as it identifies the number of lost customers in a certain period.
Industries and Brands with the Most Loyal Customers
Which are the top companies with the highest number of loyal customers? Believe it or not, you might find these fascinating facts an eye-opener.
16. Apple holds a 91% loyalty score.
The company builds a close relationship with its consumers by ensuring high-quality customer service. According to Apple brand loyalty statistics, almost all consumers are loyal to the brand for a long time—one of the main reasons is the satisfaction with the services they offer.
17. American Express guarantees 5% cashback to retain and acquire new customers.
Data suggests that American Express is the credit card company with the most loyal customers out there.
American Express customer retention strategy results are valuable for both parties—the company maintains and attracts new people, while consumers benefit from their gratifying services.
18. 80% of consumers would change bank institutions for a better experience.
As stated by bank customer retention statistics, most consumers switch financial institutions when the competitor can offer a better service. Customers are cautious when it comes to the management of their income. Offering a better experience to consumers is a good strategy for both retaining and acquiring new consumers.
19. The insurance industry has an average retention rate of 84%.
Insurance has the highest customer retention rate by industry. However, the remaining 16% represents the rate of loss of customers per year. As reported by The Independent Insurance Agents of Dallas (IIAD), acquiring a new customer in the insurance industry is more expensive than in any other field. Insurance customer retention statistics prove that insurance agents spend around seven times more on getting a new customer than retaining an old one.
20. 71% of customers who visit a restaurant will never come back after one bad experience.
Restaurant customer retention statistics demonstrate this business must take customer satisfaction seriously in order to be successful. Alongside the quality of food, drinks, atmosphere, hygiene, and location, customer experience is the most valued component in the restaurant business.
Customer Retention Statistics: The Takeaway
While most businesses keep focusing on acquiring new customers, retaining them can be quite challenging too. If brands neglect their existing customers’ needs, they will probably face a tremendous loss in revenue.
Additionally, investing in an existing customer is far cheaper than acquiring a new one and more rewarding in terms of profit.
According to customer retention facts, most buyers abandoned a brand and switched to a competitor because of poor customer service. Customers indeed demand companies to have outstanding service and be able to solve their issues quickly.
Loyalty program statistics prove that special offers and awards encourage people to purchase multiple times from a brand. A retained customer is a loyal customer that will stick with the brand for a long time, therefore brands should introduce loyalty programs.
Frequently Asked Questions
What percentage of customers are repeat customers?
Customer retention is the most important aspect of a brand’s success. Although many businesses mostly focus on acquiring new customers, retention is far more vital.
The standard of repeat customers should be from 20% to 30% monthly, but it can vary based on the industry. For example, ecommerce businesses have an average of 25–30% monthly. If the monthly percentage is less than 25% returning customers, the brands should adopt retargeting to promote repeat purchases.
What is the average customer retention rate?
It’s not a secret that the highest your customer retention rate is, the most successful your brand will be.
While the average retention rate usually doesn’t even reach 20%, this figure can vary from industry to industry. For example, products in the media or finance industry see a fairly high customer retention rate—it usually reaches 25%. As for SaaS and e-commerce, a 35% retention rate is considered elite.
What is good customer retention?
Brands achieve good retention when only a few or no retained customers are leaving for the competition. Improving customer retention means increasing customer satisfaction and brand loyalty.
However, many companies suffer from a tremendous loss of clients due to the lack of customer attention. A bad experience with a brand can significantly impact its reputation, causing many retained customers to turn to the competitors. In this case, it’s essential to listen to feedback and find strategies to develop better services.
What is the value of customer loyalty and retention?
Retaining customers allows brands and consumers to build a more emotionally connected and profitable relationship in the long run.
Customer retention and loyalty mostly stand in engaging with customers, listening to their feedback, organizing helpful surveys, offering loyalty programs and valuable discounts. That’s why staying in contact with customers and adding assessments can lead to increased repeat sales and a better relationship with buyers. After all, that’s what defines the value of customer loyalty and retention.
Is it cheaper to keep old customers or get new customers?
Many businesses firmly believe that acquiring new customers is the key to increasing their sales. Unfortunately, this can make retained customers not feel valued enough to the point they will abandon the brand and turn to their competitors.
Apart from being the driver of most of a company’s sales, customer retention statistics prove that repeat customers can be five times less expensive than acquiring new ones. On top of that, it takes a lot of purchases before gaining the loyalty of a customer.
Sources
Access Development, Apple Insider, Business2Community, Einpresswire, Get Superfi, HuffPost, InMoment, Investopedia, Marketing Charts, MixPanel, Outbound Engine, PWC, Qualtrics, Retention Science, SaleCycle, SalesForce, Thanx, The Independent Insurance Agents of Dallas, The Motley Fool