Home > Business

Customer Retention Statistics & Predictions [Updated: August 2020]

customer retention statistics cover

The Customer is always right!

You must have heard that old truism a million times. That statement couldn’t be more relevant today.

The digital world not only shapes customers’ buying experience – it puts them at the center of its universe.

Check out these:

Telling Customer Retention Statistics:

  • 91% of consumers are more likely to shop from brands who recognize, remember, and provide them with relevant offers and recommendations.
  • 65% of a company’s business comes from previous customers. 
  • 86% of the customers with great purchase experiences will likely buy from the same company again. 
  • 5% boost in customer retention increases profits with 25% to 95%. 
  • 82% of consumers in the US stop doing business with a brand if not satisfied with the customer service. 
  • Businesses miss out on $1.6 trillion from losing customers to a competitor. 
  • Acquiring new customers costs 5 times as much as retaining existing ones. 
  • It costs 16 times more to build a long-term relationship with a new customer, compared to keeping existing.
  • 50% of customers direct their loyalty to another business within 5 years.

Repeat Customer Statistics

To understand the importance of repeat customers let’s look at what retention rate means.

What is retention rate?

Client retention rate is the percentage of customers kept. It’s the opposite of churn rate, which is the percentage of customers lost.

How to calculate customer retention rate?

It’s pretty straightforward:

  1. Notice how many of your clients have returned to buy from you a second time
  2. Divide that number by the total number of clients your business has had
  3. Multiply the result by 100

Congratulations – you have your repeat purchase ratio. This is how many clients out of every 100 you can expect to come back for another purchase.

How many actions does the consumer take?

That’s another factor to consider when calculating client retention rate. And it indicates the number of actions the consumer takes, necessary to include them in the repeat customers report.  

Have they only logged in? Or have they logged in, signed up for a weekly newsletter and made a new purchase?

Over what time do you measure retention?

Lastly, you’ll need to figure out the right time span within which to measure your average customer retention rates. 

That could be anywhere between a couple of days and several months, all depending on your business processes, objectives, and observations.

Customer Retention Statistics 2020

Let’s first look at the latest data revealing how important customer retention is for business and what’s the driving factor for us – customers.

1. 77% of brands could disappear overnight and no one will even care.

(Vivendi)

In their latest report, Havas Group found that a staggering 77% of brands could disappear, and customers wouldn’t even be bothered. This is the highest figure reported since their research first began more than a decade ago. It’s also grown three points since their 2017 results. This clearly shows the difficulty that most brands have in presenting a meaningful image of themselves to their customers.

2. 65% of American consumers say a positive experience is more important than great advertising.

(PwC) 

Managing a positive experience for buyers is becoming much more critical for ensuring that your clients’ customer journey is a successful experience – more critical even than impactful advertising. In their survey, PwC found that 65% of American consumers agreed with this statement, and an even larger figure of 75% agreed that customer experience was an important factor in their decision to purchase a product.

Most companies certainly don’t seem to be paying enough attention to this fact as less than half of the customers surveyed stated that they had a good experience with companies’ customer services this year.

3. Bad employee attitude is the biggest factor that drives away customers from a business.

(PwC) 

Nearly 64% of those surveyed stated that a bad employee attitude would greatly influence their decision to stop buying from a brand. For the U.S., the figure was slightly higher at 67%. Other major factors that were driving customers away included unfriendly service (61%), a lack of trust in the company (49%), and unknowledgeable employees (45%).

Customer Satisfaction & Retention Statistics

You can probably figure that your business will profit significantly if you manage to keep your client retention rate up. 

That doesn’t mean you should stop attracting new customers, of course.

But you probably need to have in mind that: 

4. 48 % of all consumers have left a business’s website and purchased elsewhere because the page wasn’t easy to navigate.

(Accenture)

This survey found that nearly half (half!) of buyers will skip your product if you can’t make the purchase experience exciting. And that shows the importance of originality for customers.

If you can’t turn your prospects into buyers, you won’t be able to turn them into loyal brand ambassadors either.

What’s more:

5. 34% of consumers will never buy from a brand after just 1 bad experience.

(Oracle)

This is one of the reasons why companies lose customers. 

And it’s not surprising the loss businesses suffer due to poor service amounts to $1.6 trillion.

Another interesting number businesses need to consider is:

Mobile Customer Retention Stats

couple customers holding mobile phone

6. 42% of consumers’ total online time is on mobile devices.

(Perficient)

We can all agree that makes sense, given that cellphones have become an extension of ourselves, in a way.  

So it’s only logical that:

7. 57% of people won’t recommend a business if the website doesn’t have a well-designed mobile version.

(Sweor)

Customers do expect companies to meet a high standard of service. That’s not enough, though – apparently speed is also a factor:

8. 53% of people will abandon a mobile website if it takes longer than 3 seconds to load.

(Google Marketing Platform)

People appreciate speed across all stages of the customer experience. Even after they’ve already made a purchase and they need some help. 

9. 60% of companies think they’re providing a good mobile experience, but only 22% of consumers agree with that.

(Qualtrics)

These are the numbers for 2017. Now, companies may have marked a slight improvement since then. That said, you’re still going to be way ahead of the pack if you optimize the mobile experience of your website.

Is your business mobile? How do you feel about your service?

If you haven’t put much thought into it, now is the time to look closely at how happy your current customers are. Here’s why:

Customer Service & Customer Retention

customer service executive working

10.  83% of US clients prefer to deal with humans, rather than digital channels, when it comes to customer service issues.

(Accenture)

I can completely relate to the frustration of having to deal with an automated answer machine.

According to a Harvard Business Review, customers turn to a business’s support team to get a quick and easy solution for their problem.

Satisfactory customer service is what customers want. When that need is not met we come to this:

11. More than half of consumers expect a response from customer service within an hour, even on weekends.

(Edelman Digital)

Now, you may think you’re doing what’s necessary to make your customers happy. 

But look at this: 

12. 79% of consumers have made a purchase via smartphone in 2018.

(OuterBox)

So, digital customer experience becomes increasingly important as the preferred way to shop shifts to mobile.

What’s the average customer retention rate there then? 

Divided by industry, mobile retention also differs by months. Let’s look at what Localytics’ findings were for 2017. 

For 

  • Month 1: Travel & Leisure had the highest retention rate of 44%; followed by Media & Entertainment with 43%. eCommerce/ Retail had 40% and Business & Technology was at 36% retention rate. 

The percentage starts to drop after the first month. 

  • Month 2: Travel & Leisure – 35%Media & Entertainment with 32%. eCommerce/ Retail29% and Business & Technology27% retention rate. 

The client retention rate at the end of month #3 goes down further with somewhere between 3 and 5%. 

But what is a good customer retention rate?

Opinions differ but one research by Mixpanel shows that most apps and software have between 6-20% retention rate (for a 2-month time span), depending on the industry.

Now, while customers seem to prefer making purchases through a mobile device, companies need to consider that: 

Customer Journey Facts

Woman Wearing Beige Dress Shirt Using Laptop Computer

13. 73% of consumers use more than one buying channel on their shopping journey.

(Harvard Business Review)

Customers who use multiple channels to shop spend 4% more in a physical store and 10% more online than the single-channel customers. And every additional channel they use means they spend even more money. 

What does that tell us about customer satisfaction and retention

Customers like to do their research.

14. 65% of buyers research products online before going to a physical store.

(Retail Dive)

Not only that, but customers expect to have the same pleasant experience no matter the way they chose to shop. And unfortunately, they don’t always get it.

15. 71% of customers confirm they want a consistent experience across channels, but only 29% say they get it.

(Forbes)

It becomes obvious the hard part of the job is pleasing the clients so they stick around. 

The slightly unfair part is – a happy client won’t necessarily go around, sharing how happy they are with you. Unhappy clients, on the other hand, are different.:

Importance of Customer Retention

customer retention concept

16. 41% of consumers, and almost half of Millennials – 47%, agree to pay up to 20% more for exciting customer experience.

(Oracle)

The experience your client has is part of what you’re selling, whether it’s a product or a service. Improve the experience – and you can attract better clients and charge more for serving them. 

Further stats show that:

17. 62% of clients share the bad experience of your business with people.

(Salesforce)

Yup, get used to it. Unhappy clients are always more vocal. You’re inevitably going to see negative feedback, even if your business is actually doing fairly well. 

Let’s now look at what will actually make customers become part of your brand loyalty statistics.

18. 77% of the consumers and 60% of millennials say they’ve held relationships with specific brands for over 10 years.

(InMoment)

So, it’s actually possible to build a lasting relationship with your clients. 

And the right service will lead to:

19. 60% of consumers talk about a brand they’re loyal to their family and friends.

(Yotpo)

The good news is that customers also like to share their positive experiences. 

However… turning consumers into loyal brand ambassadors means tending to their needs.

What does that mean?

Here’s what Forbes reports:

Customer Retention and Marketing Stats

online shopping with personalized experience

20. Over half of the content from top brands is poor and irrelevant to customers.

(Source: Vivendi)

There is a 72% correlation between content effectiveness and a brand’s meaningfulness. Despite the importance of quality content when it comes to customer retention, roughly 58% of the content created by the world’s leading 1,800 brands is “falling massively short of consumer expectations.” This is true about more than 473,000 generated tweets and 4 million videos that are being watched on YouTube every minute.

21. Emails remain the most effective marketing channel for customer retention.

(Source: Small Business Trends) 

As per customer retention statistics, 80% of businesses rely on email marketing for customer retention. Over half of them considered it to be the most effective method of realizing their customer retention goals. Other important marketing channels for customer retention included paid searches (43%), social media (44%), and retargeted ads (37%). Mobile marketing was found to be the least effective with a figure of just 8%.

22. Marketing and Sales are among the least trusted professions.

(Source: HubSpot)

According to a HubSpot study, it was found that marketing and sales professionals have a terrible image among the general public, only being considered slightly more trustworthy than lobbyists, politicians, and car salesmen. Unsurprisingly, in another report, it was found that when it came to making purchasing decisions for business software, only a minority (22%) of customers were influenced primarily by the salesperson compared to word of mouth (55%) and customer references (46%).

23. 33% of consumers ended their relationship with a company because the experience wasn’t personalized enough.

(Forbes)

Consumers like to be engaged with your brand in a way that makes them feel like you know them. 

24. 68% of consumers believe it’s important for businesses to tailor experiences based on the client’s tastes and preferences.

(Oracle)

And buyers are ready to pay for that personalization.  

25. 42% of people are more likely to purchase from brands that offer original ways to experience their products or services.

(Oracle)

Consumers understand that personalized experience means they’ll need to share a bit of personal information. 

And according to Accenture, they don’t seem to mind it. 

26. 83% of consumers are willing to share personal information to enable personalization.

(Accenture)

Now, sharing data comes as part of an agreement that businesses will be transparent about how they use it. 

27. And 71% of the surveyed seemed to agree that businesses didn’t communicate with them in a too invasive way.

(Accenture)

Now.

By 2020 we expect to have more than 30 billion IoT devices, which will rise to 80 billion by 2025. Business will need to transition into a digital-first business model. 

While this will help companies optimize their processes, it will also mean customers will have the upper hand when communicating with brands.

Consumers will need to be shown the value of the service you offer and in a much more personal way.

And that can be tough.

But don’t worry, there’s a light at the end of the tunnel.

Ask and listen to what your customers want. They genuinely want you to know what that is, so they can buy it from you. 

Brand Loyalty Statistics

Female customers getting paper bags at counter desk

28. 55% of consumers believe brands actually play a more important role than the government in shaping the future.

(Vivendi)
Today, buying increasingly becomes a political act, with more than half of all consumers believing that brands now play a bigger role than the government in shaping the future. Customers are making strategic use of their collective buying power to influence and initiate change by rewarding (or punishing) brands based on what effect they have on the world and what views they are supporting.

29. Meaningful brands outperform in the stock market by 134%

(Vivendi)
Being meaningful is becoming crucial for business since brands perceived as making the world a better place outperform the stock market by a remarkable 134%. Brand activism is now a necessary condition for business success, especially when it comes to maximizing customer retention and revenue.

Customer Retention Technology

What do you need to do to make customers stay?

1. Create a dialogue

The future is digital. Companies need to make use of that and turn to technology to help them start an online conversation with their customers. This is where using data to predict the best experience is useful. That way, a business can offer its customers exactly what they want.  

2. Offer price premium 

Everyone likes a good deal and that remains valid for consumers in a data-driven age. Customer service studies show that people are willing to share more information with a company if that means better experience. This includes personalized price discounts. 

3. Get it right – the first time

A bad customer journey can be an issue for any business. If a customer gets disappointed with your service, you won’t see them coming back. So, you should invest in creating platforms that are able to “wow” your customers. 

4. Have a “chop-chop” attitude

One thing that is crucial, according to loyalty statistics, is speed. You need to address your customers’ concerns and address them quickly. 

That together with helpful employees and friendly service matter the most. 

5. Have a human touch

Interacting with a real human is important to clients. Regardless of the technology that supports the customer journey, consumers like to know there’s someone there they can actually talk to. 

6. Be consistent

When you create your customer experience, bear in mind your clients will be using different means to shop. Provide convenience, so clients will have the same great experience shopping on their phones, tablets, or in a physical store.

Final Thoughts

Business and personal life are now becoming one. Clients expect to be targetted in a way that is relevant to them.

You can go around offering discounts for rollercoaster rides to seniors but they’re most probably not interested. (Although, how awesome would that be!)

More than that, it’s no longer enough to assume someone will be more engaged with your product just because they’re in that demographic group. 

People want to feel personally involved and if you want to be on the positive side of the customer retention statistics, start spelling “personal” right. 

FAQ

Why is customer retention important?

(Beehive)

The importance of customer retention to businesses mainly boils down to three reasons – cost-savings, increased profits, and productivity. It helps cut costs because you have to spend less on marketing as retained customers already know about your products and services as well as act as your brand advocates in their circles. It helps increase profits because repeat customers, on average, spend more. It helps boost productivity by reducing the work burden on employees since long-term customers act as an invaluable source of information for honing products and services and spotting new growth opportunities.

What percentage of consumers end a relationship with a business due to poor service?

(Small Business Trends)
Data on customer service statistics show that almost 7 in 10 customers within the U.S. end their relationship with a business due to poor service. Nearly half of the customers are also likely to make a switch to a competitor within a day of experiencing poor customer service.

 

Resources: 

  1. Vivendi
  2. PwC
  3. PwC
  4. Accenture
  5. Oracle
  6. Perficient
  7. Sweor
  8. Google Mobile Platform
  9. Qualtrics
  10. Accenture
  11. Edelman Digital
  12. Outerbox
  13. Harvard Business Review
  14. Retail Dive
  15. Forbes
  16. Oracle
  17. Salesforce
  18. InMoment
  19. Yotpo
  20. Vivendi
  21. Small Business Trends
  22. HubSpot
  23. Forbes
  24. Oracle
  25. Oracle
  26. Accenture
  27. Accenture
  28. Vivendi
  29. Vivendi
  30. Beehive
  31. Small Business Trends

Leave Your Comment