Customer retention and brand loyalty are the healthy diet and exercise of retailing. We all know the benefits. We know we’ll be sorry someday if we don’t make an effort. But in the rush to promote products and break into new markets it’s easy to put existing customers on the back burner. We’ve already got their business. What we need is growth, and that means new customers.
The statistics we’ve gathered here illustrate the promise and peril of dealing with existing customers. We explore the cost of acquiring customers versus keeping them. The disproportionate contributions of your top customers. The dollars and cents of brand loyalty.
No doubt you will find some of this terra cognita. You’ll probably find some eye-opening new information too. We hope this data inspires and empowers you to set up loyalty programs and define customer retention strategies.
Brand loyalty statistics from the United States, Germany, Brazil, Japan, the U.K., and other countries contribute to a complete, global view of customer dynamics. We’ve collected 30 fascinating customer retention facts plus short comments, tips, and tricks you can use to encourage the people who shop in your store to keep coming back. Customer lifetime value will keep your business a success for years to come.
Top Brand Loyalty Statistics, Editor’s Choice
- The top 10% of your patrons probably spend three times more than your average customer.
- Acquiring a new customer can cost five times more than retaining an existing customer.
- 33% of American customers say they consider switching companies immediately following a single instance of poor service.
- 55% of consumers believe companies have a more important role than governments in creating a better future.
- 77% of businesses that exceeded their revenue goals in 2018 have documented personalization strategies.
- 95% of loyalty program members want to engage with the programs via virtual reality, wearable devices, and other cutting-edge technology.
- Customers who are emotionally connected have a four times greater lifetime value.
1. Acquiring a new customer costs as much as five times more than retaining an existing customer.
The first rule of any business should be to retain customers and build a loyal customer base. Efforts to increase customer retention should take priority over customer acquisition for almost all businesses at almost at all times, experts say. Without a dependable base of repeat customers, organic growth and longevity are impossible – regardless of how many new customers you bring in the door.
2. 44% of companies admit they have “a greater focus” on customer acquisition, while 18% concentrate on retention. The rest say they focus on both equally.
Invesp reports that only 42% of companies say they can measure the lifetime value of a customer accurately. But the value is surely there: Experts say the likelihood of selling a product or service to an existing customer is 60% to 70%, while only 5% to 20% of new prospects are likely to buy. The marketing plan for any type of product or service starts with a budget, and experts say money spent on customer-acquisition – without customer retention strategies in place – is often money wasted.
3. 13% of unsatisfied customers will tell 15 or more people about their lousy customer experience.
The best way to boost customer retention? Don’t give shoppers a reason to walk away and look back in anger. Dissatisfied customers will abandon your brand without giving you a chance to improve. And that’s not even the worst part – they are highly likely to badmouth you behind your back. Here’s another reason a retained customer is worth your while: With every unsatisfied customer, you’re likely to lose 15 or more future prospects. Those are some serious long-term consequences.
4. 77% of brands could disappear and no one would care.
Here’s disheartening news for startups and small businesses worldwide: Customers most likely wouldn’t care if you disappeared off the face of the earth. This is a three-point rise compared to 2017 results, the highest annual rise since Havas began researching this topic in 2008.
More and more startups are popping up every year, all competing for the same pool of prospects, and that’s bad news for brand loyalty. It’s increasingly difficult to step into the spotlight, let alone stay there.
5. Google, PayPal, Mercedes-Benz, and WhatsApp are among the top 10 Havas Group “meaningful brands” for 2019.
To come up with this list, researchers behind Havas Group’s annual Meaningful Brands study surveyed more than 350,000 consumers, compiling data on 1,800 brands, 31 markets, and 22 industries. Conducted annually since 2008, the study explores the ways in which brands “tangibly improve people’s lives and the role they play in society.”
Brand loyalty statistics depend largely on brands’ being recognized for their seemingly irreplaceable role in people’s lives. In addition to identifying top performers, the report also lists brands people view with relative indifference.
Customer Retention Marketing in Today’s Economy
6. 55% of consumers believe companies have a more important role than governments in creating a better future.
The modern corporation has an increasingly stronger grip on customers’ thoughts and feelings, but this is a double-edged sword. As many as 77% of customers say they would rather buy from companies who “share their values.” In other words, to earn their business it is no longer sufficient to offer good products and services at a fair price. Brand activism, image-building, and even the charities they contribute to can affect the customer’s decision to stay loyal. Customer retention techniques must be updated to reflect these new realities.
The 2019 Meaningful Brands survey found that the younger the consumer, the more value alignment customers expect: 76% of Gen Xers, 84% of millennials and 87% of Gen Z.
6. Meaningful brands outperform the stock market by 134%.
More benefits of customer retention: Brands that align with customer values lock in greater returns on KPIs, including 24 points more for purchase intent and 39 points for advocacy.
7. 67% of consumers said good customer experience encourages them to stay longer or spend more money.
To increase client retention, you need to make sure the customer’s experience with your brand is impeccable. Honest, helpful interactions with employees make your consumers feel validated, heard, and important. And the opposite is true: If a one-on-one conversations with customers go purely, the consequences can be devastating. Quitting your brand forever is only the beginning – see statistic #3 for how bad experiences multiply in your prospect base.
8. 84% won’t come back to a retailer if they’ve had a poor experience returning a product.
In early 2019, Klarna commissioned more than 2,000 interviews with UK shoppers to take a fresh look at how they feel about returns. The results demonstrate that full-spectrum customer retention must include services such as money-back guarantees and free returns. Klarna statistics suggest that a free-return policy must be at the very heart of your customer service program as well as your customer-retention program.
9. 77% of businesses that exceeded their revenue goals in 2018 have a documented personalization strategy, while 74% have a dedicated budget for it.
To reduce customer turnover, you’d better make shoppers feel special. Modern companies use customized landing pages, history-based product recommendations, other techniques to deliver a unique shopping experience to each customer. Personalized marketing means delivering individualized content through data analysis and automated tools – fundamental parts of customer retention technology.
Companies reporting the highest return-on-investment from personalization programs are twice as likely to name customer lifetime value as a primary business objective than those who achieved lower ROI.
What Are Customer Retention Strategies?
10. 78% of shoppers will buy more in the long run if a retailer has free returns.
Trust is a key issue in eCommerce. Sure, the dress is pretty, but will it look good on me? How do I know the headphones will be delivered on time, even delivered at all? A free-returns policy is like a safety net that lets new customers know that they can count on you. Researchers say a free-returns policy is essential in establishing a long-term relationship with customers. Retailers who don’t offer an easy returns process lose sales and forfeit customer loyalty.
11. Surprise offers or gifts are the best ways to engage 61% of customers.
What is customer retention supposed to look like? According to a 2019 report, consumers increasingly prioritize instant gratification when it comes to redeeming rewards. Unexpected incentives help them feel valued by their favorite brands, fostering stronger emotional connections. Younger consumers from the millennial (55%) and Gen-X (38%) generations especially appreciate brands that offer creative and unexpected rewards, whether on social media or in stores.
12. Addressing a problem or question is the top engagement strategy for 45% of customers.
Researchers say customers are more likely to recommend a brand and make future purchasers after the brand has correctly and promptly answered questions or addressed problems.
13. Only 9% of consumers said social media was their preferred way to engage with brands.
Modern marketers love to reach out via online communities, but Merkle research demonstrates that customer engagement via social media doesn’t contribute much to converting prospects to repeat customers.
That doesn’t mean you should ignore social media completely. You can still engage the 10% of youngsters among your prospects there, surprising them with special offers. And you should definitely use your profile page to spread the message regarding your brand’s values.
14. 61% of shoppers would stop purchasing from a retailer if it had flawed website functionality.
A tiny detail on your website doesn’t work all that well? Better jump on it. Your competitors’ websites work like a charm, and that’s where your customers will be a few milliseconds after they experience disappointment at your site. Researchers say they’re never coming back. Functional website design is how you do business online, and if you fail to provide top-quality service, your client retention rates are sure to decrease.
15. 31% of shoppers would be more likely to buy something if they could pay for it after they have decided to keep it.
Yes, there is a risk of loss, but a try-before-you-buy policy delivers incredible value in customer trust and respect. Statistically, returns are not likely. People find it tiring to pack up goods and ship them back. So you lose fewer sales than you think you will.
16. 33% of American customers say they’ll consider switching companies immediately following a single instance of poor service.
Retaining customer trust and satisfaction levels can be difficult, but there is no alternative. One essential factor: customer service. American consumers reward companies with loyalty in return for considerate, personalized, targeted service. And even a single instance of poor service is rarely forgiven. More than half of Americans have scrapped a planned purchase or transaction because of bad service.
Characteristics of Recurring Customers
17. The top 10% of your customer base is probably spending three times more than your average customer.
This is the most important reason repeat customers are your best friends when it comes to your company’s survival and growth. That’s the word from an Adobe reported based on analysis of anonymous data from 33 billion visits to 180 online retail websites representing $51 billion in annual U.S. online sales and €18 billion in European sales.
18. Shoppers with an emotional connection to a brand have a lifetime value four times higher than the average customer’s.
The most effective customer retention services often involve addressing consumers’ emotions. That’s the word from marketing-technology company Motista, which has published the results of a two-year study on the impact of emotional connection on the buying behavior of more than 100,000 U.S.-based consumers across more than 100 brands.
19. 47% of consumers won’t engage with a business after a moment of brand disappointment.
In an important addition to customer retention statistics, Accenture found that nearly half of the customers you have failed will never engage with your brand again. Accenture’s 2018 survey of 29,530 consumers in 35 countries highlights the importance of getting it right every time.
20. 70% of consumers are more likely to recommend a brand with a quality loyalty program.
Adopting a loyalty program is a great way for your business to identify and retain your very best, most loyal customers. Investing in the program over time can lead to increased referrals, positive reviews, and improved customer satisfaction. Customer loyalty programs will do more than just help you hang on to your happy customers. Recommendations and praise from your core audience will help you acquire new customers, too.
22. 37% of customers are willing to pay a fee for an enhanced tier of membership in loyalty programs.
Among younger customers, the numbers are even higher. Some 46% of millennials and 47% of Gen Z consumers say they would pay.
Consumers say they can justify a small cost in return for status, access, ease, and a better customer experience. Customer loyalty programs can thus represent a substantial revenue stream for brands and the opportunity to provide richer, more tailored, and highly relevant content and experiences to their very best customers.
23. 95% of loyalty program members want to engage with the programs via cutting-edge technology.
Technology like chatbots, artificial intelligence, virtual reality, wearables, and connected in-home devices support the creation of new ecosystems for retailers and consumers. Integrating loyalty programs with customer experience promises to be a game-changer for marketers.
24. Customers who have an emotional relationship with a brand have a 306% higher lifetime value.
Customer retention metrics demonstrate that emotionally committed customers are also more likely to recommend the company – 71% compared to the average rate of 45%. Customers who connect a coffee brand with the warm feeling they get when spending time with their families will spend an annual sum of about $699 with the company. A regular, satisfied customer will spend an annual sum of only about $275.
25. 37% of American customers start to feel loyal to a company after five or more purchases.
Customer retention definitions are sometimes hard to put into words, but Yotpo asked customers to take their best shot. The study reveals that the bar for brand loyalty is high — a repeat purchase or two doesn’t mean you have a new fan. Bringing back a customer five times is no small feat as consumer demands grow: 67.3% of shoppers expect 24/7 customer service, while 71.0% anticipate more frequent discounting and 58.4% want free shipping in exchange for their loyalty.
The Importance of Customer Retention
26. A whopping 77% of shoppers claim they’ve held relationships with specific brands for 10 or more years.
This is even true of 60% of millennials, despite their reputation for impulsivity and their relative youth. The more people trust a brand and enjoy using it, customer retention statistics show, the more likely they are to share these experiences with friends and family.
27. 60% of loyal customers purchase more frequently from their preferred companies.
InMoment’s 2018 survey demonstrates that shoppers appreciate retention marketing efforts. Researchers found that 61% of loyal customers would rather stick with a brand they trust than keep looking for alternatives. Additionally, 60% of consumers say they will make more frequent purchases. That number rises to 70% among millennials.
28. 55% of online shoppers abandon their carts and never return to the retailer’s site.
There are many explanations for this dynamic. The most useful information for business owners is that you must pay close attention to what happens in the shopping cart if you want to retain customers. No customer retention rate formula is complete without a set of shopping-cart abandonment solutions.
As many as 87% of online shoppers will abandon their carts if they perceive the checkout process as too long or too complex. (Cision)
29. 58% of consumers say their number-one reason for shopping-cart abandonment is high shipping costs.
Customers expect that no costs will be added to their purchases during checkout. This standard is often impossible to meet due to shipping costs. Nevertheless, research shows that shipping costs are a big part of customers’ decision to choose a specific brand. Shipping costs are a big part of brand loyalty statistics.
For best customer retention, find a way to reduce shipping costs as much as possible. Unless shipping costs are negligible or nil, shoppers feel cheated. They’ll leave your site and look for a better alternative.
30. 42% of consumers report that a negative experience with sales staff is the single factor most likely to cause them to abandon a retailer forever.
Your customer retention rate depends a great deal on your staff, so keeping them well-rested and satisfied is a good idea. Researchers say pushy sales staffers can nudge customers into shopping online or with a competitor. Another surprise: 49% of consumers say they have lied to sales staff to get out of a conversation in the store.
Top 5 Industries With the Most Loyal Customers
Researchers at Bain & Company studied the loyalty levels of 18 industries, ranging from cell phone service and cable TV to various types of insurance. Business Insider published a sneak peek at the results. Here’s the list of the top five industries customers can’t get enough of, along with the average customer retention rate by industry.
#1 Groceries and Supermarkets
Loyalty index score: 49%
Top company: Trader Joe’s (82%)
#2 Online shopping
Loyalty index score: 47%
Top company: Amazon.com: (70%)
#3 Department, wholesale and specialty stores
Loyalty index score: 46%
Top company: Costco (77%)
#4 Online search and information
Loyalty index score: 43%
Top company: Google/Facebook tie (53%)
#5 Auto insurance
Loyalty index score: 35%
Top company: USAA (73%)
What is meant by customer retention?
A customer retention program consists of all the marketing and customer loyalty actions and activities businesses organize to make people commit to their brand and make repeat purchases. It also includes efforts to reduce customer defections. The goal of customer retention programs is to make sure the customers you acquire keep using your brand as opposed to competitors’ brands – and ideally recommend them to friends and family.
What are the benefits of customer retention?
The top 10% of your customer base is spending three times more than your average customer, so the first major benefit is revenue. Also, it’s less expensive to keep customers than to acquire new ones, so an effective customer retention program can save you money. Finally, repeat customers are more likely to recommend you to others, making your brand visible and desirable in the long run.
How to calculate customer retention rate?
You need three pieces of information to calculate your customer retention rate:
Shoppers at the end of a period
New shoppers acquired during that period
Shoppers at the start of that period
Here’s an example:
You start the week with 200 shoppers. You lose 20 of them, but you acquire another 40. In the end, you’ve got a total of 220 shoppers.
Now do the math:
220 – 40 = 180
180/200 = .9
.9 x 100 = 90
In this case, your retention rate is 90%.
Achieving high customer loyalty requires an investment in cash and manpower. It’s hard work, but there’s no other way to boost return-customer revenues and boost your brand’s reputation.
What should you do? The truth is that EVERYTHING MATTERS. Every aspect of your business, from shipping fees to shopping-cart design, from return policies to customer service, can make somebody stay with your brand for 10 years or leave it in a split second.
If you want to stay in the game for the long run, brand loyalty statistics suggest that you need to pay urgent attention, now, to how you retain and reward your best customers.