28 Critical Customer Retention Statistics [2022]

By Abby McCain
May. 23, 2022

Research Summary. It can be easy for companies to focus all of their efforts on marketing their products and services to new customers, but what about the ones who have already bought in? Customer retention is an often-overlooked factor of business, but it can help companies determine if they’ll sink or swim.

  • Boosting customer retention by 5% increases profits by 25-95%.

  • Companies have a 60-70% chance of selling to an existing customer vs. a 5-20% chance of selling to a new customer.

  • 65% of a company’s business comes from existing customers.

  • It costs six to seven times more to acquire new customers than to retain existing ones.

  • 72% of customers switch to a competitor after one bad experience with a brand.

  • Businesses lose over $75 billion each year to lost customers due to poor customer service.

For further analysis, we broke down the data in the following ways:
Benefits | Tactics | Retention vs. Acquisition | Customer Opinions | Causes of Bad Retention | Churn Rate
65% of a company's business comes from existing customers

Customer Retention Statistics by the Benefits of Good Customer Retention

  • A company’s top 10% of most loyal customers spend three times more per purchase than the other 90% of customers do.

    In addition, a company’s top 1% of customers spend five times more than the remaining 99% do.

  • The probability of an existing customer making a purchase is 60-70%.

    On the other hand, there is just a 5-20% chance that a new customer will buy something from your business.

    Existing customers also tend to spend 31% more and are 50% more likely to try a new product from your brand than new customers are.

  • 60% of U.S. customers chose to do more business with a company after a positive customer service experience in 2020.

    While this is a significant percentage of customers, it is lower than the 68% of customers who came back to a company because of good customer service in 2017 and the 66% who did the same in 2018.

  • In the apparel industry, repeat customers spend an average of 67% more in the 31-36 months after their first purchase than they do in the first six months.

    As shoppers became more loyal to a brand, the number of times they’d return to that brand to shop increased, as did the amount they spent there.

Customer Retention Statistics by Retention Tactics and Strategies

  • 90% of consumers will recommend a brand after engaging with it on social media.

  • 70.7% of global companies said that ease of resolution does the most to enhance customer satisfaction.

  • In 2019, businesses around the world spent a total of $323 billion on the customer loyalty ecosystem.

  • The average U.S. customer belongs to 16.7 loyalty programs but uses less than half of them regularly.

Customer Retention Statistics by Retention vs. Acquisition

  • 18% of businesses prioritize customer retention over customer acquisition.

    44% of companies focus more on customer acquisition, while the remaining 38% focus on them both equally.

  • Acquiring new customers can cost six to seven times more than it does to retain current ones.

    Not only does it take less effort to keep an already satisfied customer satisfied than it does to woo a new customer, but loyal customers also tell others about the brands they love, doing your company’s customer acquisition work for you.

  • By boosting customer retention rates by just 5%, companies can increase their profits by up to 95%.

    A Harvard Business School study showed that even though it isn’t usually immediate, focusing on customer retention can increase profits by 25-95%. This is because as time goes by, the cost of retaining loyal customers goes down while their purchases go up, positively affecting the company’s bottom line.

Customer Retention Statistics by Customer Opinions

  • 56% of customers stay loyal to a brand that “gets” them.

    This means that over half of customers keep coming back to a brand that understands what their needs and preferences are and then meets them. This goes for everything from products to customer service.

  • 74% of people say they’ll stay loyal to a brand due to quality products.

    However, just providing high-quality products isn’t enough to secure customers’ loyalty, as 66% said that a good value product (what customers are getting for their money) would inspire their loyalty, and 56% said the same about customer service.

    Here are the top seven factors that keep customers loyal to a particular brand:

    Factor Percent of Customers Who Say This is Very Important to Their Brand Loyalty
    Product quality 74%
    Value for money 66%
    Product consistency 65%
    Customer service 56%
    Easy shopping experience (incl. returns) 55%
    Selection/Assortment of products 55%
    Pricing 54%
  • Just 37% of customers cite rewards as a reason to stay loyal.

    This is the result of a survey conducted with customers from around the world, and it was true in almost every country that customers cared more about brands’ transparency than about their loyalty programs.

Customer Retention Statistics by Top Causes of Bad Retention

  • 72% of customers will switch brands after one bad experience.

    These bad experiences often involve long wait times and an excessive number of hoops to jump through in order to get ahold of customer service representatives, with only 53% of customers saying they were able to resolve their issues the first time they reached out to a company.

  • 26% of surveyed U.S. customers say a poor experience with customer service caused them to lose trust in a brand.

    While this is a significant factor in bad retention, a faulty product was also a top reason for customers to lose trust in a brand.

  • Just 8% of surveyed customers said they believed that the brands they were being asked about offered excellent customer service.

    However, 80% of those brands said they thought they offered excellent customer service, showing that the disconnect between what companies think they’re offering and what their customers perceive can be dangerously wide.

Customer Retention Statistics by Churn Rate

  • The average company loses 10-25% of its customers each year.

  • The average customer retention rate across all industries is about 75.5%.

  • The media and the professional service industries both have the highest worldwide customer retention rate at 84% each.

  • The hospitality, travel, and restaurant industry has the lowest customer retention rate at 55%, followed by retail at 63%.

  • The average annual customer retention rate for the SaaS industry is 50-68%.

Customer Retention Statistics FAQ

  1. ​​What is the average customer retention rate?

    The average customer retention rate is about 75.5%. This is the average of all global industries’ retention rates, the greatest of which (84%) belongs to both the media and the professional services industries.

    The insurance and automotive/transportation industries come next with 83% customer retention rates, followed by the IT services industry with a rate of 81%, and construction and engineering with an 80% retention rate.

    Financial services and telecommunications both retain about 78% of their customers, while the healthcare and IT/software sectors both have retention rates of 77%. Banking comes close behind with a 75% retention rate, followed by consumer services and manufacturing with rates of 67% each.

    The retail industry has a 63% customer retention rate, while the hospitality, travel, and restaurant industry rounds out the list with the lowest retention rate of 55%.

  2. What percentage of the average company’s revenue comes from existing customers?

    65% of the average company’s revenue comes from existing customers. This is because existing customers are 60-70% more likely to make a purchase than new customers are since they already know about the company and aren’t wondering if they’re making a good purchase.

    In addition to being more likely to make a purchase, existing customers spend more money than new ones do, and this increases the more loyal they are. In numerical terms, the top 10% of most loyal customers will spend an average of three times more per purchase than the remaining 90% of customers.

    Beyond that, the top 1% of most loyal customers spend five times more than the remaining 99% do, on average, showing just how valuable loyal customers are to organizations.

  3. How do you calculate a churn rate?

    You calculate a churn rate by dividing the number of customers you had at the end of a period of time by the number you had at the beginning of that period and then multiplying that number by 100. This will give you a percentage that represents your company’s churn rate for that period.

    To illustrate this, say that you’re trying to calculate your company’s churn rate for April. At midnight on April 1, you had 2,500 customers subscribed to your service, and at 11:59 p.m. on April 30, you had 2,225 subscribers.

    So, to get your churn rate, you’d divide 2,225 by 2,500, which would give you 0.89. Multiply that by 100, and you get 89, so your churn rate for April is 89%.

  4. How do you calculate customer LTV?

    To calculate customer LTV (lifetime value), you multiply customer value by the average customer lifespan.

    Knowing a customer’s lifetime value can be important to understanding which markets are most profitable so that you can focus on reaching those markets.

    Calculating this by customer segment (rather than a rate for all of your customers) is usually the most effective way to use this metric, so that’s what we’ll do in this example.

    Say you’re trying to find the customer lifetime value of your online customers.

    To do this, you’ll need to start by determining your average purchase value by taking the total value of all purchases within a timeframe and dividing them by the number of purchases within that timeframe.

    So, if your online customers made 5,000 purchases during 2020, and they were worth a total of $20,000, your average purchase value would be $4.

    You’ll also need to find your online customers’ average purchase frequency by taking the number of online purchases made during the year and dividing them by the number of customers who made a purchase online that year.

    This means you’d take the 5,000 purchases and divide that by the 1,000 customers who made them, which would give you an average purchase frequency of five purchases per customer.

    Next, you’ll need to multiply your average purchase value by your average purchase frequency, which will give you your customer value. In this case, this would be 5 x $4, which gives you a customer value of $20.

    While this is a valuable number to know as well, you’re looking for your customer lifetime value, so you’ll need to complete one more step: Multiplying the customer value by the average customer lifespan.

    In this case, your customer value is $20, and say you know your online customers stick around and buy your products for an average of five years. You’d multiply $20 by five, which gives you $100. This is your customer lifetime value, and it means that each of your online customers is worth about $100 to your company.

  5. How much does improving customer retention by 5% increase profits?

    Improving customer retention by 5% increases profits by 25-95%. This means that if you convince just 5% more of your customers to keep purchasing from your company, you could see an increase of 25-95% in profits.

    There are several factors that cause this. One is that it costs six to seven times more to acquire a new customer than it does to retain an existing one, which means an increase in customer retention means lower costs for the same amount of revenue.

    In addition, happy, loyal customers are more likely to refer your brand to others, which cuts down even more on your work of acquiring customers.

  6. What percentage of customers will switch to a competitor after one bad experience?

    72% of customers will switch to a competitor after one bad experience. This means that it’s vital that your company offers excellent customer service from the beginning of the purchasing process through after the purchase has been made.

    More specifically, keeping short wait times and easily accessible representatives is huge, as just 53% of customers said they were able to resolve their issue the first time they tried contacting a company.

    When you’re looking at how well your company’s customer experience operations are humming, make sure you’re asking your customers what they think because often, this can be wildly different than what you think.

    Case in point: 80% of surveyed companies believed they were offering excellent customer service, while just 8% of their customers agreed.

Conclusion

Customer retention is all too often overlooked by companies (just 18% prioritize it over customer acquisition), but it can bring big benefits: Just by increasing their customer retention by 5%, companies can see 25-95% increases in revenue.

This is partly because existing customers are more likely to make a purchase than new ones are, as companies have a 60-70% chance of selling to a current customer and just a 15-20% chance of selling to a new one. In fact, 65% of companies’ business comes from existing customers.

Keeping current customers around is also cheaper than finding new ones – six to seven times cheaper. Not losing customers due to poor customer service also pays off, as businesses lose more than $75 billion to customers who switch to competitors or decide not to purchase due to poor customer service.

References

  1. Hoovers. “The Age of the Customer: Focus on Retention.” Accessed on May 3, 2022.

  2. Forbes. “Businesses Lose $75 Billion Due To Poor Customer Service.” Accessed on May 3, 2022.

  3. Smile.io. “What is a Repeat Customer and Why are They Profitable?” Accessed on May 4, 2022.

  4. Invesp. “Customer Acquisition Vs. Retention Costs [Infographic].” Accessed on May 4, 2022.

  5. Statista. “Share of Customers in the United States Who Did More Business with Companies Due to Good Customer Service From 2017 to 2020.” Accessed on May 4, 2022.

  6. Bain & Company. “The Value of Online Customer Loyalty and How You Can Capture It.” Accessed on May 4, 2022.

  7. Statista. “What Are the Top Three Factors That Impact Customer Satisfaction with Your CX Services?” Accessed on May 4, 2022.

  8. Statista. “Business Spending on Customer Loyalty Ecosystem Worldwide in 2019, by Type.” Accessed on May 4, 2022.

  9. Statista. “Average Loyalty Program Membership in the United States From 2015 to 2021.” Accessed on May 4, 2022.

  10. American Express. “Retaining Customers Vs. Acquiring Customers.” Accessed on May 4, 2022.

  11. Harvard Business School. “The Economics of E-Loyalty.” Accessed on May 4, 2022.

  12. FreshLime. “56% of Customers Stay Loyal to Brands That Understand Their Preferences.” Accessed on May 4, 2022.

  13. KPMG. “The Truth About Customer Loyalty.” Accessed on May 4, 2022.

  14. Business Wire. “No Second Chances: New Northridge Group Study Reveals 72% of Consumers Will Likely Switch Brands After Just One Bad Service Experience.” Accessed on May 4, 2022.

  15. Statista. “Reasons Why Consumers Would Lose Trust in Brands in the United States as of 1st Quarter 2021.” Accessed on May 4, 2022.

  16. Chron. “What Percentage of Customers Does a Business Lose Each Year?” Accessed on May 4, 2022.

  17. Statista. “Customer Retention Rate of Businesses Worldwide in 2018, by Industry.” Accessed on May 4, 2022.

  18. Woopra. “Churn Rate Vs. Retention Rate: How to Calculate These SaaS KPIs.” Accessed on May 4, 2022.

  19. Qualtrics. “How to Calculate Customer Lifetime Value.” Accessed on May 4, 2022.

How useful was this post?

Click on a star to rate it!

Average rating / 5. Vote count:

No votes so far! Be the first to rate this post.

Author

Abby McCain

Abby is a writer who is passionate about the power of story. Whether it’s communicating complicated topics in a clear way or helping readers connect with another person or place from the comfort of their couch. Abby attended Oral Roberts University in Tulsa, Oklahoma, where she earned a degree in writing with concentrations in journalism and business.

Related posts

Topics: Glossary, Guides