Customer Retention Statistics emphasize just how crucial it is for business success. The ability to keep customers not only saves time but also boosts revenues and fosters business growth. In this article, we delve into the most important customer retention statistics that shed light on the reasons why it’s so vital.
Why is Customer Retention Important
Customer retention is one of the most important activities across the business. But here are the reasons why it is so important.
- Brands can improve revenue by up to 75% by retaining 5% more customers.
- Profitability can be improved by 25% by retaining existing customers.
- About 50% of a company’s revenue can be generated by the top 8% of loyal customers.
- A company’s valuation can be derived from the most high-value customers.
- Customer loyalty management is valued at $4 billion a year (March 2022).
- Globally, $75 billion is spent by brands on their loyalty management system.
- It costs approximately 1/6th the price to convert a customer that has already bought from the brand.
- Other studies have shown that it can cost up to 25 times to convert a new customer compared to an existing customer.
- 82% of brand leaders think it is much more cost-effective to sell to existing customers than it is to new customers.
- Many brands report that 65-75% of their business comes from retained customers.
- Consumers moving to a new brand is costing businesses $1.6 trillion a year.
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Loyalty Program Statistics
Loyalty programs are the bedrock of customer retention systems. They can be used by brands that are in retail, tourism, or even services. But how are they helpful?
- Loyalty programs can help to increase the average income of a customer by 54%.
- The average customer is part of 16-17 loyalty programs, but they will only utilize about seven of them.
- In the past five years, consumers were joining about 24.6% more loyalty programs, but utilization of these programs only increased by 10.4%.
- 2021 was the first time that the use of loyalty programs improved during the past six years.
- Personalized gamification can improve a company’s growth by up to 10%.
- Within the next five years, 15% more successful businesses will benefit by $800 billion through their personalization loyalty programs.
Personalization of the Loyalty Programs
Personalization is really important for loyalty programs and other marketing activities. How does personalization help loyalty programs to achieve more? These statistics tell us more.
- Starbucks has been using gamification through its loyalty programs that have been tailored to the customer.
- Starbucks used games to collect data about customers.
- Starbucks has improved its marketing campaigns by 300% by introducing games and personalization.
- Email redemption with loyalty programs at Starbucks has increased by 200% thanks to personalization.
- Customers will also spend 300% more through redeemed offers from the personalization of emails.
- Half of the large companies will have 25 or more employees that work on personalization efforts.
- The same companies will spend more than $5 million on personalization campaigns.
- Only about 15% of brands can be considered ‘personalization leaders’.
- Dedicated personnel and inadequate cross-functional coordination can be two barriers for businesses to achieve personalization within their marketing.
- Other barriers to personalization include poor creative processes, poor knowledge/talent, and a company culture not aligned with innovation.
- More than half (60%) of companies struggle to measure personalization campaign results.
The Average Customer Retention by Industry
Different industries will have better or worse customer retention. In this section, we look at the best and worst industries for retention and what they can achieve.
- Media and professional services have the best customer retention rate, with a retention rate of about 84%.
- The industries with the lowest customer retention include the hospitality, restaurant, and travel industry. Their rate is about 55%.
- The Automotive and Transportation industries have a very strong loyal customer base.
- Interestingly, despite that moving suppliers can result in savings, the insurance industry is also very good at retaining audiences.
- IT services have a customer retention rate of about 81%.
- Construction and Engineering has a high customer retention rate, with the average being about 80%.
- Retail has one of the lowest customer retention rates, with just 63%.
- Consumer services and manufacturing also had poor customer retention with a 67% retention rate.
Churn Rate Statistics
The churn rate is the number of customers that are lost by a business. This statistic is vital because it shows how many customers believe that they can get a better deal or service from another supplier. Low churn rates normally mean better customer retention.
- Cable and financial/credit services have one of the highest customer churn rates, with their churn at 25% each.
- General retail also has a very high churn rate, with a rate of 24%, online retail fared only slightly better with a churn rate of 22%.
- Big Box Electronics has one of the lowest churn rates, with their rate at just 11%.
- Global businesses can experience a 30% churn rate.
Additional Customer Retention Statistics
Numerous statistics can help determine how to keep customers spending money with a brand. The more times that a customer returns, the higher the ROI for the marketing campaigns.
- 75% of customers prefer a brand that will offer rewards for staying with them.
- Understanding the customer’s needs and desires can help improve retention with 56% of customers.
- Email is still the number one tactic that is being used to retain customers.
- Organic search is the second most successful way to retain customers. Artificial intelligence can help predict patterns in itis
- Paid search is the third most successful marketing channel for retaining customers.
- Social media, surprisingly, is the fourth most successful marketing channel for bringing customers back.
- Three-quarters of customers changed their shopping behaviors during the Covid-19 pandemic. Most changed the brands they bought from.
- Location can also matter. For example, 62% of the users in North America prefer Linux for their Windows VPS servers, and in Europe, the rate is 52%.
- 69% of consumers will shop more at a brand that offers consistent messaging in communications and during customer service.
- 90% of customers say that how a brand reacts in a crisis determines whether they are trustworthy.
- Only 48% of customers say that they trust companies.
- Only 40% of customers will spend money with a brand that has poor customer experience.
- 70% of customers will not forgive a brand if they have a bad experience.
- Customers are 34% more likely to return to a brand if they’ve had a good experience.
- It takes 12 positive customer experiences to make up one negative experience.
Final Word: Customer Retention Statistics
Customer Retention Statistics underscore the importance of retaining customers in building a strong brand. Achieving this isn’t always easy, but it’s essential for success. Providing positive experiences, personalization, and loyalty programs emerge as some of the best strategies to ensure your brand keeps customers and increases its revenue.