We have collected customer retention statistics for small businesses from a variety of sources. Enjoy the list and see if there are any attention-grabbing ones that may be particularly relevant to your company.
What is customer retention?
Customer retention refers to the strategic efforts companies make to keep existing customers engaged and loyal over the long term. It's important to foster positive relationships with your customers to encourage repeat purchases, promote brand advocacy, and reduce customer churn.
This includes consistently delivering a great experience, personalized service, and proactively responding to customer needs. An effective customer retention strategy aims to build a loyal customer base that contributes to long-term revenue and maximizes customer lifetime value.
Companies strive to build stable and loyal customers by understanding and meeting the evolving preferences and expectations of existing customers.
Last updated: October 16, 2016
Customer retention statistics
Customer retention and marketing
- 80% of businesses surveyed rely on email marketing for customer retention.
- 56% of survey respondents believe email marketing is the most effective way to achieve customer retention goals.
- 36% of US retail professionals say organic search increases customer retention.
- 43% of US retail professionals say paid search increases customer retention.
- 44% of US retail professionals say social media increases customer retention.
- 37% of US retail professionals say retargeting increases customer retention.
- 21% of US retail professionals said affiliates increase customer retention.
- 18% of US retail professionals say referral marketing increases customer retention.
- 8% of US retail professionals say mobile marketing increases customer retention.
Customer retention and sales costs
- Acquiring a new customer costs 5% more than retaining a current customer.
- It costs 16 times more to bring a new customer to the same level as a current customer.
- 82% of companies agree that retention is cheaper to execute than acquisition.
- Improving customer retention by just 2% can reduce costs by as much as 10%.
Customer retention and customer service
- 82% of US consumers say they have stopped doing business with a company because of a poor customer experience.
- Businesses lose 71% of consumers due to poor customer service.
- 68% of customers will leave you because they perceive you to be indifferent to them.
- 60-70% of customers will do business with a company again if it handles customer service issues fairly, even if the outcome isn't in their favor.
- 47% of customers would take their business to a competitor within a day after experiencing poor customer service.
- 66% of consumers who switched brands did so because of poor service.
Customer retention and revenue
- The average repeat customer spends 67% more in months 31-36 of their relationship with a company than in months 0-6.
- A 5% increase in customer retention can lead to a 25-95% increase in profits.
- Reducing customer churn by 5% can increase profitability by 25-125%.
- Repeat customers spend 33% more than new customers.
- A 10% increase in customer retention levels increases company value by 30%.
Customer retention statistics overview
|customer retention statistics
|Probability of sales to existing customers
|Probability of selling to new prospects
|Future profits from 20% of existing customers
|Transactions from existing customers
|Management prioritizes customer retention
|Annual customer churn rate
|First-time customers do not return
|Businesses that use email marketing
|The most effective way to retain customers
|Email marketing (56%)
|Boost customer retention with organic search
|Drive customer retention with paid search
|Social media drives customer retention
|Boost customer retention with retargeting
|Affiliates drive customer retention
|Referral marketing to drive customer retention
|Mobile marketing drives customer retention
|Cost of acquiring new customers compared to retaining current customers
|5% or more
|The cost of bringing a new customer to the level of a current customer
|16 times more
|Companies agree that retention is cheaper than acquisition
|Improving customer retention rates leads to increased profits
|Improved profitability due to lower customer churn rate
|Repeat customers spend more than new customers
|Improving customer retention levels leads to increased corporate value
The importance of customer retention
Customer retention is an important aspect of a successful business strategy. While acquiring new customers is essential for growth, retaining existing customers is equally important for continued business success and long-term sustainability.
- Sustainable revenue and profitability
- Brand advocacy and word of mouth marketing
- Improving customer lifetime value (CLV)
- Insights for improvement
- Stability in turbulent times
- build trust and relationships
- Cultivating a customer loyalty program
- platform for growth
Sustainable revenue and profitability
Retaining existing customers ensures a steady income as they are more likely to make repeat purchases and are generally less sensitive to price changes. These customers tend to buy more products over time because they develop trust and loyalty to your brand. Cultivating this loyalty not only stabilizes your revenue stream but also provides a predictable financial picture for planning future growth strategies.
Attracting new customers requires marketing, advertising and promotional activities, which can be costly. Research shows that acquiring a new customer can be 5 to 25 times more expensive than retaining an existing customer. By investing in customer retention, companies maximize the value of their existing customer base, making it a more cost-effective strategy in the long run.
Brand advocacy and word of mouth marketing
Satisfied customers often become brand advocates and share their positive experiences with others. This word-of-mouth marketing is extremely valuable because it comes with the credibility of a personal recommendation. This is a powerful tool that can drive new customer acquisition more effectively than traditional marketing methods.
Improving customer lifetime value (CLV)
Focusing on customer retention strategies like loyalty programs and personalized customer service can significantly improve your CLV. This metric represents the total revenue a company can expect from one customer during the relationship and is an important indicator of long-term business success.
In a crowded market, the ability to retain customers can be a key differentiator. Companies that foster and maintain customer relationships are more likely to withstand market competition and changing consumer trends, setting them apart from competitors who must continually invest in new customer acquisition.
Insights for improvement
Engaging and retaining customers provides rich insights into their preferences, behaviors, and feedback. This information is invaluable for continually improving our products and services. This allows businesses to make data-driven decisions that are more likely to meet customer expectations and needs.
Stability in turbulent times
A loyal customer base acts as a buffer during economic downturns and market changes. These customers provide a reliable source of revenue, allowing businesses to maintain stability and weather difficult times more effectively.
build trust and relationships
Trust is the foundation of customer retention. Consistently delivering on promises, providing quality products and services, and communicating transparently help build strong, long-term customer relationships. This trust leads to customer loyalty and retention.
Cultivating a customer loyalty program
Implementing a loyalty program is an effective way to reward repeat customers and encourage business retention. These programs can offer discounts, exclusive access, or other perks that not only encourage purchases but also improve the customer experience.
platform for growth
A strong base of loyal customers provides a stable platform on which companies can explore new markets, innovate products, and expand their services. With a reliable revenue stream from existing customers, companies can more confidently allocate resources to growth opportunities.
The importance of customer retention extends to many aspects of your business, from increasing revenue to impacting marketing strategies like SEO. It also plays a vital role in optimizing sales costs and improving the quality of customer service. To learn more about customer retention, check out the resources linked below.
Retain customer photos via Shutterstock