What’s the first word that comes to mind when you think of something disposable you’d use to wipe your face?
Is it a) tissue or b) kleenex?
If you’re reading this in North America, chances are it’s going to be the second one.
But did you know it’s actually a registered trademark?
That’s right. A brand name is used more often than the generic term. Brand loyalty on a subliminal level.
And this fun fact is only one of the most important customer loyalty statistics I’ve collected to bring you up to speed with the state of the field in 2019 and beyond.
But before digging deep into every interesting stat, let’s have a look at some important fascinating facts first.
Eye-opening Customer Loyalty Statistics: Editor’s Choice
- 65% of a company’s business comes from existing customers.
- 43% of people spend more money on brands they’re loyal to.
- A 5% increase in customer retention can lead to a 25% increase in profit or more according to statistics about customer loyalty.
- Highly-engaged customers buy 90% more often.
- 84% of US adults are loyal to specific retailers.
- Almost 90% of buyers are willing to pay more for improved customer experience.
- Recruiting new customers costs 5X more than retaining existing ones.
- Building a long-term business relationship with a new customer is 16X more costly than cultivating the loyalty of an existing customer.
Intrigued? I bet you are. And there’s plenty more where that came from.
Let’s dive right in.
What Is the Benefit of Customer Loyalty?
Which is better – keeping your existing customers or recruiting new ones?
Let’s see what the stats have to tell us.
1. 65% of a company’s business comes from existing customers.
(Source: Fundera)
- 80% of profits come from 20% of a company’s existing customers.
- Do loyal customers spend more? 43% of people do indeed.
- Recruiting new customers costs 5X more than retaining existing ones.
Attracting new customers is no easy task. It takes plenty of time and effort and a lot of money.
Which begs the obvious question:
“Why not prioritize your existing customer base instead?”
Actually, it makes perfect sense to do so.
According to customer loyalty stats, most of your profit will come from one-fifth of your existing customers.
And it’s not just about short-term profits.
2. Building a long-term business relationship with a new customer is 16X more costly than cultivating the loyalty of an existing customer.
(Source: Annex Cloud)
There’s a 60%+ chance of selling to an existing customer. - The chances of a first-time visitor to your ecommerce website buying something are less than 20%.
- A 5% increase in customer retention can lead to a 25% increase in profit or more.
Thanks to customer loyalty statistics for 2018, we already know how expensive and time-consuming it is to recruit new customers expensive.
But the difficulties don’t end there:
Building a long-term relationship with them requires top dollar as well.
What’s more:
Statistics of customer loyalty tell us existing customers are far more likely to buy your product than first-time visitors. By increasing your customer retention, you can boost your profits significantly.
3. Highly-engaged customers buy 90% more often.
(Source: Vision Critical)
- They also pay 60% more per transaction.
- Engaged customers are 5X more likely to stick to the same brand in the future.
- A strong emotional connection is a stronger driver of loyalty than “ease” or “effectiveness.”
Connect with your customers on an emotional level, and they’ll repay you with unwavering loyalty.
Here’s the key takeaway:
Highly-engaged customers will buy a lot more often and spend more on each transaction than customers who are ambivalent about your company. This is why brand loyalty is important.
Which brings us to the next question…
What Is a Good Customer Retention Percentage?
First of all, here’s a handy formula you can use to calculate your own customer retention rate courtesy of the guys at Hubspot:
Customer Retention Rate = ((# Customers at End of Period – # Customers Acquired During Period)) / # Customers at Start of Period)) X 100
4. According to customer loyalty statistics for 2017, the average customer retention rate in most industries was less than 20%.
(Source: Hubspot)
- Retention over 25% is considered above average in the media and finance industries.
- Retention over 35% is considered above average in the SaaS industry.
- Retention over 38% is considered above average in the ecommerce industry.
- Most apps and software have a 6-20% retention rate.
So, what is a good customer retention rate?
Unfortunately, there’s no simple answer.
The thing is:
Customer retention rates tend to vary significantly across different industries.
What’s considered a good retention rate for a media company might be well below average for an online store. That’s why you should pay close attention to the latest trends and developments in your niche.
5. 57% of people would stop using a brand if their negative review is left unanswered.
(Source: Fundera)
- 68% of customers do so because they believe the company no longer cares about their business.
- 43% leave because they lose trust in the company.
- Brand loyalty statistics state 50% of customers stop using a brand straight away after a bad sales experience.
- 54% of consumers would drop retailers who don’t offer engaging content and/or relevant coupons.
- Businesses lose $1.6 trillion every year when customers leave them.
There are plenty of factors that can lead to a low customer retention rate.
It should come as no surprise that the most important ones have to do with engagement.
Consumer reports on customer service are clear:
If you don’t give a hoot about your customers, don’t address their legitimate criticism, and don’t offer them any incentives, they’re likely to turn to the competition. And you’ll suffer huge losses.
After all:
It’s not like yours is the only small business selling printed T-shirts and tote bags – and small businesses fail at an alarming rate.
And now that we know why customers leave, let’s check out what keeps them coming back for more.
Here’s what the latest consumer loyalty statistics have to say:
6. Price and value are the top reason to stay loyal to a brand for 92% of customers.
(Source: Business Wire)
- Product and quality are the second most important reason, with 79%.
- 77% of consumers will stick with a brand that resends lost or damaged items with fast shipping.
- With 71%, variety and selection are the third most important reason.
- 62% of consumers are willing to spend more if their shopping experience is customized to their interests.
If you’d like to bump up your customer retention rate (and, let’s face it, what business owner doesn’t), you should start by offering a quality product at a competitive price.
Next, you should widen your product range.
Finally, as customer loyalty statistics for 2019 make clear, you need to make sure each and every one of your customers gets a shopping experience perfectly suited to his or her unique needs.
As spy extraordinaire Harry Hart put it in the movie Kingsman: The Secret Service:
“Now the first thing every gentleman needs is a good suit. By which I mean, a bespoke suit.”
Can’t argue with that.
And here are some strategies to boost your customer retention:
7. Customer loyalty statistics suggest you should segment your customer base by personas.1Distinct segments of shoppers who tend to have similar demographics and exhibit similar purchasing behavior.
(Source: Hubspot)
- Highlight case studies during the sales process.
- Create a roadmap for your future relationship with your customers.
- Ask for customer feedback and act on it.
- Keep a record of communication to address past and/or recurring issues.
Once again, it all boils down to engaging with your customers in a courteous and constructive manner.
Loyal customers will appreciate your respect for their opinions and your efforts to act on their feedback, as the latest statistics on customer loyalty programs highlight.
However:
Take extra care not to creep out your customers! According to a 2016 report, this happens most often when companies misuse personal data, fail to delete data upon request, or use invasive marketing tactics.
8. 74% of millennials would consider switching to a different retailer in case of poor customer service.
(Source: Business Wire)
- 86% of GenXers would leave if customer service is poor.
- 85% of Baby Boomers would do so.
- Almost 90% of buyers are willing to pay more for improved customer experience.
- 58% of millennials would stick to the same brand no matter what.
- 80% of millennials buy exclusive store-branded products because they get good value for money.
Brand loyalty statistics for 2018 suggest negative sales experience affects millennials far less than it does older generations. Click To TweetWhile poor customer service remains a big turn off across the board, over half of millennials are willing to stick with the brands they’re loyal to through thick and thin.
And that’s great news for startup owners, in particular, as they face an uphill struggle to stay in business.
Customer Loyalty Program Statistics
9. 73% of buyers think loyalty programs should be a way for brands to show loyalty to customers.
(Source: Kitewheel)
- Members of loyalty programs generate between 12 and 18% more revenue than non-members.
- There are 3.8 billion loyalty program memberships in the US.
- 56% of consumers improve their opinion of a brand which offers personalized rewards.
“The things we do for frequent-flyer mileage,” as James Bond sarcastically noted in Goldeneye. On that particular occasion, he had to catapult out of a stationary helicopter seconds before it got demolished by Stinger missiles.
Sound familiar?
The thing is:
Glib remark or not, we all cling on to loyalty schemes in the face of adversity. And we’re willing to book that slightly more expensive flight from New York to Warsaw as long as it’s going to earn us a few extra miles on our Star Alliance membership card.
Even if there’s a five-hour layover in Tangier.
Ouch.
10. According to Starbucks customer loyalty statistics, the coffee company’s membership program grew more than 25% between 2017 and 2019.
(Source: Zinrelo)
- According to Apple customer loyalty statistics, the brand had a 91% loyalty score in 2017.
- Amazon customer loyalty statistics state 95% of Amazon Prime members would “definitely” or “probably” renew their membership.
- 85% of Prime buyers visit Amazon at least once a week.
- According to customer loyalty statistics for the UK, 36% of Brits use customer loyalty programs multiple times a month.
Big brands like Amazon, Apple, and Starbucks offer some pretty lucrative loyalty schemes – and customers on both sides of the pond are getting hooked!
What’s more:
Small businesses are increasingly getting in on the action in order to improve customer retention by rewarding loyal customers.
Which brings us to the $64,000 question:
Are Customers Loyal?
Indeed they are – to a surprising extent.
11. 84% of US adults are loyal to specific retailers.
(Source: Fundera)
- In addition, 82% of Americans are loyal to product-brands.
- 37% of US customers become loyal to a company after five purchases or more.
- 60% of loyal customers will purchase more frequently from their preferred companies.
- People will pay a price premium of more than 13% for luxury services if they have a great customer experience.
These customer loyalty stats unequivocally show customers aren’t as fickle as many would have you believe.
Bottom line:
Nurture your existing customer base, and you’ll reap the benefits Click To TweetConclusion
Now that we’ve studied carefully the latest customer loyalty statistics, we can safely conclude two things:
First, customers expect a diverse range of high-quality products. Yes, content is king – in more ways than one.
Second, customized offers and exemplary customer service are absolutely crucial. And you have only one chance to get it right. One strike and you’re out.
However:
As long as you meet your customers’ (admittedly high) expectations, your venture will live long and prosper.
Cheers to that!
Now get a kleenex and wipe those tears of joy.
Sources:
