43 Brilliant Customer Retention Statistics

Customer Retention Statistics - featured image

43 Brilliant Customer Retention Statistics

By DarkoFebruary 10, 2020Blog

[vc_row][vc_column][vc_column_text]Customer retention is the backbone of a successful business. Even though many companies still overlook the importance of keeping existing clients, it is a viable strategy that leaders across all industries are taking on due to the numerous benefits.

The latest customer retention statistics reveal that it is cheaper to retain current customers and build a healthy, positive relationship with them than struggle with the competition in order to gain new clients. Unfortunately, many companies still make this mistake and focus their attention solely on gaining new customers.

Below, we’ve put together the most essential and useful brand loyalty statistics to help you create the most successful strategy that will reduce customer churn rates.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”A Quick Look at the Most Important Statistics (Editor’s Pick)” font_container=”tag:h2|text_align:center” use_theme_fonts=”yes”][vc_column_text]

97% of company leaders feel that customer retention is a top priority
It could cost up to seven times more to draw a new customer than retain a current one
Customer retention statistics reveal that 85% of customer churn is in the hands of the company
The probability of selling to an old customer is 60-70%, while the probability of selling to a new customer is only 5-20%
80% of the business revenue comes from 20% of return customers
40% of customers reported purchasing after listening to a podcast
The customer retention rate a business should strive for is 85-90% or higher
80% of the business revenue comes from 20% of return customers
Only 42% of companies can’t accurately measure the lifetime value of a customer.

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Customer Retention Basics” font_container=”tag:h3|text_align:center” use_theme_fonts=”yes”][vc_column_text]To define customer retention, it’s essential to first look into the basic stats. They will help us better understand why it’s such a crucial part of a successful business.

1. 97% of company leaders feel that customer retention is a top priority.

In a survey of over 300 executives, founders, and CEOs, nearly all said that retention is an important factor when it comes to the success of their business. However, many challenges make it difficult to get the results they seek.

2. Two-thirds of consumers are more likely to switch to a competitor who offers a better shopping experience or customer service.

Unfortunately, retention and customer loyalty are declining. Companies that take the customer retention definition to heart and focus more on their existing customers have a higher chance of stealing new customers from their competitors. Customers talk amongst each other and are a crucial tool for snatching new clients from competitors.

3. 46% of shoppers consider a loyalty program when choosing a company to purchase from.

By having a loyalty program, a business can show appreciation to its customers and encourage them to stay loyal. In short, loyalty programs are key to increased retention rates, as they are the ideal way of building a strong relationship with customers.

4. 44% of companies focus on getting new clients over retaining existing customers.

Even if a business is successful in attracting new customers, if it doesn’t focus on retention, it’s like pouring water in a strainer. Regardless of how many customers the company attracts, if it cannot keep them loyal, the efforts are fruitless.

5. It could cost up to seven times more to attract a new customer than retain a current one.

It is more expensive to attract new customers than keep those already shopping with you. Simply sending informative emails to current customers is just one of many customer retention examples that are inexpensive, simple, and effective.

6. Calculating the retention rate is often done wrong, giving an artificially inflated rate that is inaccurate.

Companies often calculate the retention rate by simply using the number of customers at the beginning and the end of the month, often failing to include the number of new customers.

An example is the following. Let’s say you had 1,050 customers at the beginning of the month, 1,000 customers at the end of the month, and 75 new customers. First, subtract the number of new customers from the total number of customers at the end of the month, then divide this number by the customers at the beginning of the month to get the retention rate. The customer retention rate formula is the following:

(End of Month Customers – New Customers) / Start of Month Customers.

7. 85% of customer churn is in the hands of the company.

Once someone becomes a customer, the company has control of whether she will become a return customer or if she goes to a competitor. It all starts with quality customer service and the attention given to the customer.

8. The success rate of selling to existing customers is 60-70%, while the rate for new customers is only 5-20%.

Attracting the attention of new customers requires a lot more effort and time, and isn’t always successful. Even with a lot of research on your potential customers, you don’t know them the way you know the customers that are already loyal. It is a lot easier to know exactly how to grab their attention and sell to them. In addition, you have already built a relationship with them and it will be much easier to gain their trust on new products.

9. 48% of customers choose to stay loyal to companies that take advantage of the latest technology to communicate with them.

Technology is constantly changing and developing. It is challenging to keep up with the new advancements and software, but businesses that do so have lower churn rates. Nowadays, almost everyone owns a mobile device. This technology gives businesses a unique opportunity to stay in touch with their customers, and every retained customer has the potential to add to the revenue.

10. 58% of B2C companies give risk customers special offers or bundles.

With data collection and a better understanding of shopper behavior, businesses can target critical customers that have a potential risk of leaving them for a competitor. One of the most popular ways to grab their attention and bring them back is through special offers and bundles catered exclusively toward at-risk customers. In fact, 44% of hybrid companies opt for a similar tactic to retain at-risk customers through discount pricing.

11. The customer retention rate a business should strive for is 85-90% or higher.

The higher this rate, the better. Customer retention metrics are a way for companies to keep track of customers, their behavior, and their loyalty. To increase the retention rate, companies need to understand their customers and their habits. With retention metrics, they can calculate percentages of customers that will make a purchase.

12. 77% of current brands could disappear tomorrow, and nobody would notice or care.

A brand must be meaningful, useful, and change the lives of its customers. Brand loyalty statistics reveal that companies doing so are always ahead of the game. Being meaningful means not only helping your customers but also contributing to society. Lastly, meaningful content that is useful and comprehensive gives customers something to look forward to.

13. When customer turnover is reduced by a mere 5%, it can increase profits by 25-29%.

It’s a well-known fact that retention is a significant factor for the success of a company. Regardless of the effective marketing of a business to attract customers, retaining them is the key to long-term growth success. Even a small step toward reducing the churn rate could mean big profits.

14. Current customers are five times more likely to make a purchase and four times more likely to refer a business.

If a customer is satisfied with a company, she will turn to it again when she requires its products or services again. Existing customers are a gold mine for attracting new customers as well, because every time they are happy with the product or service the company offers, they will recommend it.

15. Grocery and food and beverage industries are performing best at customer retention.

They retain about one-fourth of customers over a month and one-eight after four months. The Maxpanel’s 2018 Retail and E-Commerce Benchmark Report reveals that lifestyle and marketplace companies are at the median and could do better, but a more extended retention window may provide better statistics.

The average customer retention rate by industry depends greatly on the retention window for scaling, as products and services are required at different intervals for different sectors.

16. Monthly user retention across all industries is below 5%.

This should be a wakeup call for most companies, especially those dependent on ecommerce, as online store retention is just 1%, an all-time low. If companies want to protect the investment they’ve made to attract new customers, they will have to use personalization to strengthen their relationships and reward the most valuable customers to encourage brand loyalty.

17. More than one-third of customers prefer interacting with a company over the phone.

A big part of retention is communication with customers. Although email, social media, chatbots, and m-commerce are a great way to market, companies shouldn’t overlook the importance of real-time human interaction.

In comparison, one-fourth of consumers prefer interacting with companies via digital channels. Self-service is on the rise, but still has a long way to go before it surpasses talking to a human. If you want to grab customers’ attention and show your appreciation, show them that they are important to you.

18. Sales representatives that use social media for selling are 50% more likely to meet or exceed their monthly sales quota.

Sales follow up statistics reveal that social media is one of the leaders for encouraging customers to buy. Whether it’s through direct messaging or targeted content, it’s the perfect way to attract new customers and improve customer retention. It may be impossible to reach out to all high-risk customers, but it’s proven that social media is a significant driver in sales.[/vc_column_text][vc_single_image image=”2716″ img_size=”1300×600″ alignment=”center”][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Techniques and Strategies for Customer Retention” font_container=”tag:h3|text_align:center” use_theme_fonts=”yes”][vc_column_text]There are many ways to improve retention, and all of them revolve around improving communication with customers and boosting trust and loyalty. Customer retention statistics reveal that maintaining loyalty comes down to building a strong personal relationship with customers.

19. Engagement is a leading trend in customer retention.

Customer retention is fueled by engagement and continuous personalization. Even though predictive models for expansion and cancellation have grown in popularity, many companies are still having a hard time measuring their customers’ needs and delivering the best experience for improving customer engagement.

20. 33% of customers consider going to a different company after just one case of inadequate customer service.

American Express reveals that more than half of Americans who had planned a transaction or purchase scrapped due to bad service. It’s not only building a good relationship over time. Customer retention also depends on attention to every detail of customers’ needs from beginning to end, over and over again.

21. 80% of millennials have the potential to become long-term customers.

Once they become a current customer, it’s crucial to touch upon important topics with them and show them the company shares their views. By knowing their opinions and behavior, a company can tap into their emotional state and turn them into long-term loyal customers.

22. Restaurant customer satisfaction increases by 17% when guests can see the chefs.

A study conducted by the Harvard Business School revealed that diners felt more comfortable and enjoyed seeing chefs at restaurants preparing their meals. This transparency showed customers they can trust the restaurant, its cleanliness, and the quality of the food, thus resulting in higher satisfaction.

23. 80% of the business revenue comes from 20% of recurring customers.

According to the Gartner Group Statistics Report, having a solid customer base is the key to success and increased revenue. By fostering a community that is exclusive to customers, companies can reduce the churn rate. Companies can reach out to them through groups on social media platforms, for example.

24. 64% of customers revealed that “shared values” is a leading reason to choose a brand.

A company that is socially responsible and shares the values of their customers has a higher chance of keeping them. This is one of the top customer retention techniques that modern companies are using to create a feeling of community among their customers.

By standing up for a cause, companies tap into the customers’ desire for authenticity. The Corporate Executive Board Review reveals that sharing values with customers can be more important than product quality.

25. Customers that found a company by word-of-mouth will spend 200% or more than customers who found it in any other way.

By impressing current customers with quality service and products, they will recommend the company to anyone willing to listen. Anyone that has reached a company this way already has a base of trust founded on the recommendation. There are many customer retention services and options available to help companies boost referrals and repeat customers.

26. 40% of customers reported purchasing after listening to a podcast.

Podcasts are a fantastic way to reach out to customers and educate them about a product or services you’re selling. They give more personal experience and provide customers with a different perspective. The possibilities are endless and allow companies to present their opinions and share views on a variety of topics.

27. 91% of companies with more than 10 employees use CRM software as their customer retention technology tool.

The competition is grueling, and without a CRM solution for automation, companies have a difficult time gathering the necessary information to streamline data storage, improve alignment between teams, and improve customer relations. In the future, only companies that use CRM software solutions will survive the competition.

28. 77% of clients state that convenience is a crucial factor in the service provider they choose.

No one wants to waste time, and clients are proving this by choosing companies that make convenience a top priority. Around 68% of consumers globally choose companies that make it convenient and easy to communicate with them. Convenience is a crucial factor in attracting future customers and keeping them loyal to the company.

29. Only 42% of companies can’t accurately measure the lifetime value of a customer.

One of the reasons that companies overlook the importance of retention is that they are unable to accurately calculate the impact a single customer would have on their business should they lose her. Calculating CLTV (Customer LifeTime Value) is a big part of calculating ROI of the customer service team and puts the importance of customer retention in the limelight. [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Marketing Statistics that Improve Customer Retention” font_container=”tag:h3|text_align:center” use_theme_fonts=”yes”][vc_column_text]Marketing is a significant part of reducing customer churn. Most people believe that it is solely for attracting new customers, but this could be a devastating mistake. For new customers, marketing is only the first step of a successful strategy to boost customer retention.

30. 80% of companies rely on email marketing to reduce customer churn.

A recent survey by WBR Digital for Emarsys on retail businesses revealed that email is the most effective way for retailers to acquire new customers and boost client retention. Of the surveyed companies, nearly 75% stated that email marketing is prioritized in their marketing strategy and budget.

31. With every returning purchase, the chances of another purchase increase.

Research reveals that every time you encourage a return customer to make a purchase, you increase the chance of her returning yet again. The possibility of a customer returning after the first purchase is 27% and continues to grow to 45% after the second purchase. After the third purchase, the chances increase to 54%.

These numbers speak for themselves. Companies that put more focus on customer retention marketing can improve their overall revenue.

32. Only 6% of small business managers and owners are focusing on customer retention.

A recent report by the Manifest reveals that small businesses aren’t doing nearly enough to focus on customer retention. This means that their marketing efforts are causing them to miss out on crucial sales that are easier and more profitable than solely marketing to attract new customers. Engaging current customers should be the number one priority for small and big businesses for retaining customer attention and business.

33. 40% of small businesses are likely to seek out professional help and hire a digital marketing agency.

Another 39% of small businesses prefer hiring a freelancer, but the numbers are similar because both offer nearly identical value. Still, most small companies trust an in-house team for the promotion of their digital marketing strategy, with only 33% using software to do it. This puts them at a disadvantage in comparison to competitors who invest more in software and professionals with experience in retention marketing.

34. 45% of retailers feel their marketing efforts to reduce churn are not performing too well.

A report by CommerceNext and Oracle revealed that nearly half of retailers feel their marketing efforts aren’t good enough to keep customers. Brightback survey asked what strategies are effective in maintaining customer retention. The customer retention statistics that this survey presented reveal mixed responses, but bundles and discounts for risk customers are leading marketing strategies for reducing customer churn.

35. 27% of customers believe companies really understand their needs, thus providing them with offers that are relevant to what they are looking for.

Many customers receive generic ads that are irrelevant to what they need. By using data collection to create customer loyalty programs, companies can focus on customer retention by providing relevant and useful information and advertising based on their loyal customers’ behavior.

36. 62% of millennials use their phones for shopping.

Being forward-looking and advanced with technology is the first step toward attracting new customers and boosting customer retention. Today, most people own a mobile device and do a lot of their shopping through it. It’s a no-brainer that marketing strategies need to be focused in this direction. If companies have loyalty programs to increase customer retention, they must extend them to mobile devices as well.

37. Repeat customers spend 25% more during holiday shopping than first-time customers who spend only 17% more over the holidays.

Although many businesses prosper over the holiday season, most of them focus on attracting new customers for increasing revenue. If their efforts were put more toward attracting the attention of their current customers, they would have an increased chance of hitting their goals and increasing revenue. Companies win many new customers over the holidays, but should not overlook the opportunity to increase client retention with personalized marketing and special offers.

38. Only 9% of consumers leave a business because of their prices.

Once someone becomes a customer, she will continue to be so until you give her a reason to look for an alternative. The benefits of customer retention become obvious after seeing that they wouldn’t leave just because of a price change. Usually, it’s because they feel undervalued (68%) or because they are unhappy with the product or service provided (14%).[/vc_column_text][vc_single_image image=”2721″ img_size=”1400×700″ alignment=”center”][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Major Communication Companies and their Retention Strategies” font_container=”tag:h3|text_align:center” use_theme_fonts=”yes”][vc_column_text]In light of so many companies putting more attention in their marketing strategies to retain customers, several companies are opting out of their loyalty programs and discounts. This leads them to lose significant existent customer footing.

39. Comcast lost over 344,000 of its cable TV customers in 2018, doubling the losses from 2017.

In the past, companies were willing to negotiate if customers threatened them to go to the competition. Usually, that earned customers discounts and various offers to stay. Today, the new Comcast customer retention strategy does not consist of offering discounts on current packages but rather creating smaller packages at a lower price. Although it lost a major portion of its customers with this new strategy, the company’s internet customer base has gone up due to high-speed internet demand.

40. AT&T Q2 2019 statistics reveal that the company lost 946,000 television subscribers.

One of the reasons for this substantial loss is due to its purchase of Time Warner Inc. and DIRECTV with promises to lower prices. However, the company increased rates and discontinued promotional discounts. Losses stemmed over to broadband subscribers as well.

Similar to Comcast, the AT&T customer retention strategy seems to be failing as more customers feel betrayed.

41. AT&T saw an increase in high-speed internet revenue in 2017 and 2018.

One way that AT&T is succeeding at increasing customer retention is by offering customers the option to bundle high-speed internet with one of its other services. This strategy to reduce churn has proven to be successful. Half of their customers that are subscribed to broadband only took the offer and switched to high-speed internet bundles, resulting in higher revenue.

42. 44,000 postpaid customers left Verizon in the first quarter of 2019.

Verizon may be doing better than its competitors in many ways, but it hasn’t fallen back in the trend of overlooking customer retention. The Verizon customer retention strategy took a step back as it put more focus on 5G upgrades by reducing customer promotions and loyalty programs.

43. Spectrum is expected to follow in the footsteps of other leaders and make substantial price hikes by the end of the year.

Although it held non-negotiable prices over time, the company could afford this because they were less expensive than competitors. Now that the competition is increasing rates, it is following in their footsteps, and it’s still unknown what the Spectrum customer retention strategy will be when promotional packages expire. In 2019, it displayed substantial revenue and performance. [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Common Questions Business Owners Ask About Customer Retention” font_container=”tag:h3|text_align:center” use_theme_fonts=”yes”][vc_column_text]We’ve said time and again that current customers are more profitable and cheaper to market to than trying to attract new customers. Unfortunately, not all companies are taking advantage of reducing churn rate and increasing their revenue faster and easier.

Before jumping into the questions, it’s essential to ask yourself one thing – What does customer service mean to you? Think about that while you check out some of the most frequently asked questions.

What are the most important statistics of customer retention I need to know?

Many statistics prove that customer retention is essential. One such is that it costs companies seven times more to attract a new customer than retain an existing one. Also, a company could easily prevent 85% of customer loss by offering quality customer service and giving customers a personalized experience focused on their needs, among other things.

What is customer retention?

Simply put, it’s turning existing customers into loyal customers. A high retention rate means the business can retain a lot of its customers. By contrast, low retention rate means that many customers are leaving the company and choosing a competitor.

What are the benefits of customer retention?

For one, you can improve customer service and create a lasting relationship with your clients. Retention is much cheaper than marketing to attract new customers, and current clients are more profitable than the new ones because they are willing to spend more.

How do you track customer retention?

Customer retention is tracked the same way you would monitor any other customer behavior. If you know your customers well enough, you’ll know when someone would choose to go to your competition. Using a quality CRM software will allow you to gather enough information about your customers so that you know when it’s time to grab their attention again and prevent them from going to a competitor.

How to calculate customer retention rates?

The most straightforward raw retention rate calculation is the following: (End of Month Customers – New Customers) / Start of Month Customers. There are more complicated formulas and online calculators where you can input information and get accurate results. Many companies opt for working with technology such as Gainsight that does the legwork for you and gathers all types of useful data to help you advance.

What number of repeat sales can be expected from each new client?

Some statistics state that a satisfied returning client can make anywhere between five to seven purchases. However, if you play your cards right, it can be far more than that, depending on the industry. Some industries require a lot of time between sales, such as the auto industry, for example. Others will have very few repeat sales, if any.

However, one statistic is particularly promising – after one satisfactory purchase, there’s a 27% chance the customer will return for the second purchase. The percent increases as the number of purchases increase, and after a third purchase, there’s a massive jump to 57%.

Customer retention programs are based on what concept?

To start with, the concept of a customer retention program is what you will do to keep the churn rate as low as possible while increasing revenue. There are different types of applications that could help you. Some of them include customer follow up, identifying at-risk customers, following up with idle customers for a certain period, and customer onboarding program.

However, no matter which approach you plan to adopt, a CRM software is your lifesaver. It allows you to organize customers based on the collected data.

What are customer retention strategies?

For a retention strategy to work, it is necessary to collect a lot of data about your customers. The key to customer loyalty is to make them feel as if they aren’t just a number. To do this, you need to know as much as possible about them. A quality CRM software will give you the power to collect the information that is most important for providing quality customer service and reduce churn rate.

One strategy is to catch the clients before they flee by detecting signals they are sending, such as purchase patterns or communication with customer service. [/vc_column_text][vc_single_image image=”2718″ img_size=”1400×700″ alignment=”center”][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Conclusion” font_container=”tag:h3|text_align:center” use_theme_fonts=”yes”][vc_column_text]You have a goldmine already within your reach. Don’t look elsewhere for profits until you have made certain your existing customers are well taken care of.

Currently, more and more companies realize how crucial it is to observe customer behavior and use it to their advantage. With the right information, you will not only be able to target customers better and provide them with more personal experience, but also keep them coming back for more over and over again. We’ve provided plenty of customer retention statistics to fully understand the importance of why your current customers should be your top priority, and we hope they were helpful.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading text=”Sources:” font_container=”tag:p|text_align:left” use_theme_fonts=”yes”][vc_column_text]

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