Keeping customers happy is the most rewarding practice a business can have because satisfied customers keep coming back for more. Recurring customers meanwhile boost the lifetime business value and bring higher revenue.
Yet, most business owners and marketers tend to focus on acquiring new instead of nurturing existing customers. That’s why we decided to gather the most important customer retention statistics to illustrate the importance and benefits of having a strong retention rate, the best strategies, and more.
By raising retention by just 5%, you can make your customers a lot more satisfied and achieve a return rate of up to 95%. Bonus benefit — customer retention is significantly cheaper than acquisition.
Retaining customers and building a new customer base should be prioritized over customer acquisition. Not only will a loyal base of customers ensure long-term organic business growth, it’s also cheaper. Still, customer retention facts show that 44% of companies are more focused on customer acquisition while only 18% focus more on retention. The rest of them pay equal attention to both tactics.
As repeat customer statistics show, loyal fans bring 33% more profits than new clients. These customers already like in the company’s products or services and believe they are superior to their competitors.
Delivering a consistent experience across the entire customer journey is crucial for customer satisfaction. A high level of customer satisfaction meanwhile means higher revenue. The customer retention statistics show that people who were completely satisfied with a certain product or service were about to make 2.6 times more profits for the company compared to a moderately satisfied customer and 14 times as much revenue as a moderately dissatisfied customer.
Loyalty programs and customer retention have a tight connection — people make purchasing decisions based not just on price but also on engagement, overall brand experience, and shared value. Investing in a customer loyalty program is a smart move that will likely reap multiple benefits in the future by keeping the customers’ income stream consistent. Plus, customer loyalty statistics have confirmed that loyalty program members spend 18% more than regular customers.
By now it’s clear that retention of customers is the bread and butter of any SaaS business. Keeping the old clients instead of paying more attention to getting new ones all the time delivers a 67% boost in sales. What is more, 70-95% of subscription-based revenue of a company comes from upsells and renewals.
Boosting revenue through customer retention is easier than acquiring new customers. A strategic customer retention process gives a 60-70% chance of selling to an old customer compared to a 5-20% chance of selling to a new customer. Bottom line is, customer retention helps you work smarter instead of harder.
Poor customer service is the reason why 51.5% of Millennials switch brands. That said, once they find a brand they like and which reflects their must-haves, they will commit. Brand loyalty statistics show that a whopping 80% of Millennials would give their trust to a brand that offers excellent customer retention strategies and will become long-term clients.
A well-crafted retention-focused strategy can improve CAC through the effect it has on word-of-mouth marketing. Word-of-mouth is by far the most important marketing tactic which has been found to influence every other purchase decision. Plus, customers that have found a company through referrals spend 200% more than the average customer and double the referrals themselves.
Bad customer service can cost you big time. The value of each customer in the USA is $289. In total, US businesses lose $83 billion on average due to poor service that drove customers to abandon their purchases. So, if your business handles a large volume of calls, and your customer support team doesn't count many agents, make sure you can rely on the industry-leading call center software to help you respond to your customers’ demands.
Stellar service is one of the most important customer retention factors. Customer service statistics have shown that an impressive number of 65% of customers say that good customer service is a decisive factor to buy something. Another 67% note that good service will actually encourage them to buy some products even if they didn’t plan on doing that.
It doesn’t take too much for people to leave a certain business. A well-established retention strategy, however, will show clients that the company cares for them. That will keep these 68% where they are. Existing clients will stay loyal and continue to shop at the same place making a huge difference in the firm’s profits.
Customer retention examples clearly illustrate that if a company manages to lower the churn by just 5%, that can lead to a 125% surge in profits. Client retention is also a surefire way to reduce churn — Sailthru’s study has shown that 45% of retention-focused companies didn’t see increases in churn compared to 33% of acquisition-focused companies.
(Small Business Trends, Sailthru)
Customer Gauge’s 2018 Benchmarks report shows that Media and Professional Services have the highest average customer retention rates, or 84% for each sector. Automotive & Transportation have a median retention rate of 83% while IT Services are at 81%. The same report reveals that the churn rates are highest in IT & Software, Banking, and Customer Services.
According to Mixpanel’s 2019 Benchmark Report, the monthly retention rate in ecommerce has reached the lowest point and is currently at 1%. Experts suggest personalization of the lifecycle marketing to deliver content that is relevant to the specific consumer which would boost engagement and cut down churn.
The customer retention rate by industry varies greatly. During the first week, media products have the strongest retention rate but Finance has the best 30-day retention rate (5%).
Insurance customer retention statistics show that more than 8 of 10 people are going to do business again with an agency they once worked with. To be exact, the client retention rate is 83% which is among the highest among all industries.
Bank customer retention statistics show a variability depending on the time span. New customers who open an account with a certain bank have a 50% chance of quitting in the first three months. This number drops to 25% annually. Another interesting fact is that 80% of all bank clients will switch to another lender to get a better experience.
(Customer Think / Business Wire)
While there isn’t any exact information regarding the average customer retention rate of restaurants, some numbers suggest that restaurants should revisit their customer retention tactics. While 34% of Americans visit restaurants for the first time at least once a week, a whopping 70% of them wouldn’t return after their first visit.
Did you know that if you want to return a product that you bought online, you’ll probably need to pay for that? Only around 49% of companies offer free back shipping. On the other hand, the ecommerce return rate statistics say that 92% of clients who get this opportunity will make another purchase from the same place. That means that allowing people to send products back for free will help you keep them as clients. And, as we said, a happy customer is a customer that makes your business grow.
Given that trust is a major issue in e-commerce, a free-returns policy is essential for companies to establish a long-term relationship with customers. Shoppers are bound to trust more brands that offer free returns and 78% would actually come back and buy more in the long run. On the other hand, 84% of shoppers won’t ever come back if they come across a poor returns policy.
Building a good strategy to make more clients come back to your store and buy something again takes a deep understanding of the preferences of different generations. For example, to impress people from Generation X, it’s best to offer them a discount on a certain product. However, this won’t work on Millennials as these guys prefer discount points.
Americans value companies that offer targeted, personalized service. But they won’t tolerate even a single instant of poor service. One-third of them consider switching companies immediately upon experiencing a bad service while for over half of them, poor service experience was a reason to not go through with a purchase.
Hopefully, these customer retention statistics have convinced you that customer retention should be an important part of any business strategy. Creating a culture of nurturing is cheaper and easier than setting up strategies for new customer acquisition. As a side benefit, you’ll see organic growth in your customer base through referrals.