70 Customer Retention Statistics for 2024: Loyalty Programs & Strategies

Attracting new customers is costlier than retaining loyal patrons. That is why business pundits would emphasize the importance of having loyal clientele. This is not easy to achieve, though, because customers can be fickle. And in this age, their expectations have reached different highs.

But with the right mix of strategies, using the right tools like CRM software, and by paying attention to customers’ needs and increasing the level of personalization, customer retention is possible. The customer retention statistics below show how the experience and service that organizations provide can impact retention.

General Customer Retention Statistics

Did you know that it costs five times more to acquire new customers than to retain existing ones? And increasing customer retention even by 5% can more than double the boost in revenue as well. That is because when customers are loyal, you can be assured that they will keep coming back to conduct business with you. The following customer retention statistics below can give you an idea of the impact of retaining buyers.

• 30% – that is how high the customer churn rate can be in some global markets. (Deloitte, 2021)
• In most industries, the rate of customer retention is below 20%. (MARKINBLOG, 2020)
• In the travel industry, customer churn is 18%. (Aspect, 2020)
• The financial/credit and cable industries have high customer churn at 25%. (Aspect, 2020)
• 82% of organizations agree that customer retention costs less than customer acquisition. (MARKINBLOG, 2020)
• $1.6 trillion – that is how much companies lose when customers take their business elsewhere. (MARKINBLOG, 2020)
• 90% of customers say how companies react in a crisis shows their trustworthiness. (Salesforce, 2020)
• 69% of people shop more frequently at stores that offer consistent customer service. (Gravy Solutions, 2020)

Marketing for Retention

Despite retention being more effective in selling more, only 18% of companies actually put a lot of effort into it. But those who do find that there are certain marketing channels that are more effective in retaining customers.

• Email marketing is the most effective channel for customer retention. Marketers rate its effectiveness at 56%. (Invesp, 2020)
• Social media marketing follows at 37%. (Invesp, 2020)
• Content marketing is close behind at 32%. (Invesp, 2020)
• With an effectiveness rate of 26%, referral marketing is one of the preferred marketing tactics of professionals for retaining customers. (Invesp, 2020)

Customer Experience Statistics

The impression a brand gives to consumers is as important as the products or services they offer. Because oftentimes, customers decide whether to patronize a company based on their customer experience. And, most importantly, it is a factor in the decision of individuals to continue doing business with an organization.

• 48% of customers say they generally trust companies. (Salesforce, 2020)
• 36% said they do not trust companies to act in the best interest of their customers. (Salesforce, 2020)
• Only 40% of consumers would consider doing business with a company that has poor customer experience. (Qualtrics XM Institute, 2020)
• 30% of customers are willing to forgive a company after a bad experience if they are perceived to offer poor experience generally. (Qualtrics XM Institute, 2020)
• Customers who find a company’s customer experience as good are 34% more likely to make a repeat purchase. (Qualtrics XM Institute, 2020)
• 59% of customers with a bad experience with a retail company decreased or completely halted purchasing from them. (Qualtrics XM Institute, 2020)
• Another study shows that 89% of business buyers would purchase from the same company again after a good experience. (Salesforce, 2020)
• It takes 12 positive customer experiences to make up for one bad experience. (Glance)

Sharing of Experiences

When they have done business with a brand, some customers like to share their experience. Moreover, 94% of consumers would recommend a company with whom they had a good experience.

• A report showed that 36% of customers would share their experience, whether good or bad. (CFI Group, 2020)
• 39% of consumers shared their experiences on Facebook. (CFI Group, 2020)
• Only 15% shared their experiences on Instagram. (CFI Group, 2020)
• Of those who shared their experiences, 50% did not post on social media. This can only mean that they spread the word through other communication means. (CFI Group, 2020)

Customer Expectations

Customers’ expectations of a company are also changing. These are mainly because of the novel coronavirus pandemic. To continue providing a great customer experience, organizations would have to start investing in top customer experience software.

• 88% of customers expect organizations to fast-track their digital transformation because of Covid-19. (Salesforce, 2020)
• 85% of business buyers say that experience is as important as a company’s products or services. (Salesforce, 2020)
• Meanwhile, 79% of consumers share the same sentiment. (Salesforce, 2020)
• A total of 69% of customers believe companies should expand their engagement methods due to the pandemic. (Salesforce, 2020)

While customers know that their business is essential to companies, they also do not want to be treated only as money-making machines. Unfortunately, companies are falling short of expectations in this regard.

• 68% of customers expect brands to show empathy but only 37% of companies do so. (Salesforce, 2020)
• 66% of customers expect businesses to understand their unique requirements but only 34% have made the effort. (Salesforce, 2020)
• Gen Zers, in particular, pay attention to personalized products and services. 74% of customers say they prefer it over standardized options. (Salesforce, 2020

And it looks like organizations are listening to customers and are learning from experiences. This is because spending on customer experience technologies is projected to reach $641 billion in 2022.

Customer Service Statistics

Great service is a catalyst for consumers’ purchase decisions. In fact, 71% expressed that they decided on a purchase due to the quality of customer service.

• 33% of Americans would switch brands after one instance of poor customer service. (American Express)
• But in another study, 78% of customers would forgive a company for their mistake if they receive excellent service. (Salesforce, 2020)
• Further, a different study showed that 73% of consumers would not hesitate to switch brands after a negative customer service experience. (The Northridge Group, 2020)
• Another report shows that 40% of customers stopped doing business with a company due to poor customer service. (Aspect, 2020)
• 91% of customers would consider another purchase after positive customer service. (Salesforce, 2020)
• 79% of business buyers have made a purchase decision based on customer service. (Salesforce, 2020)
• In comparison, 69% of consumers did the same. (Salesforce, 2020)
• Only 42% of concerns were resolved during first contact at the height of the pandemic. (The Northridge Group, 2020)
• Low customer effort when contacting customer service can drive loyalty. But only 29% of businesses measure customer effort. (The Northridge Group, 2020)
• 96% of business leaders believe that customers tell others about their poor customer service experience. 29% reported that social media is the platform most likely to be used by customers to air their concerns. (The Northridge Group, 2020)
• Almost 3 out of 5 customers said that good customer service is key to making them loyal to a brand. (Zendesk, 2020)

Convenience Reigns Supreme

When it comes to customer service, convenience is still customers’ highest priority when choosing to patronize a brand. As long as companies hit this note, they can expect one-time buyers to become long-time patrons.

• 67% of Baby Boomers prioritize convenience over brand. (Salesforce, 2020)
• Gen Zers are the most demanding bunch when it comes to convenience; 76% prioritize it. (Salesforce, 2020)
• This includes shipping—87% of business buyers expect to have flexible shipping options. (Salesforce, 2020)
• 45% of consumers said that convenience of purchasing or use is a factor to make them feel loyal towards a brand. (Zendesk, 2020)

Loyalty Program Statistics

Creating and nurturing relationships with customers is an important aspect of customer retention. The same goes for having loyalty schemes. Indeed, 69% of buyers’ decisions are influenced by the availability of a loyalty scheme.

Loyalty Programs and Memberships

• More than 90% of businesses in the US have loyalty programs. (Forbes, 2020)
• That translates to over 3.3 billion loyalty memberships. (Forbes, 2020)
• The average consumer is a member of 14.8 loyalty programs but is only active in 6.7 schemes. This increased to 7 in 2020. (Bond, 2019; 2020)
• 72% of adults have signed up for at least one loyalty scheme. (SmallBizGenius, 2021)

Preference for Rewards

• 75% of consumers say they prefer brands that offer rewards. (SmallBizGenius, 2021)
• 58.7% of customers value rewards and loyalty points as part of the shopping experience. (SmallBizGenius, 2021)
• More than 70% of buyers would recommend a brand if it has a good loyalty program. (SmallBizGenius, 2021)

Buying for Rewards

• Nearly 58% of consumers buy from a brand whose loyalty program they belong to at least once a month. (Invesp, 2020)
• 57.4% of customers join loyalty programs to save money. (Invesp, 2020)
• Meanwhile, 37.5% do so to earn rewards. (Invesp, 2020)
• Loyalty schemes can help increase revenues: 50% of consumers changed their behaviors to reach a higher tier. (Invesp, 2020)
• Case in point, 49% of customers admitted to spending more after joining a loyalty program. (Invesp, 2020)

Rewarding Business

• A case study also showed that customers enrolled in the loyalty program provided 665% of the business’s monthly revenue. (Incentive Solutions, 2019)
• After implementing a loyalty program, the average order quantity the business received went up by 319%. (Incentive Solutions, 2019)
• 22% of consumers are satisfied with the level of personalization they receive from loyalty programs. (Bond, 2019)
• A later report found that 64% of consumers adjust their spending to maximize points. (Bond, 2020)
• 72% of American buyers are more likely to recommend a brand that has a loyalty program. (Bond, 2020)

Organizations can get on board and enjoy the benefits of having a loyalty program with the help of leading gamification software. Through a gamification tool, businesses can tailor loyalty schemes and keep track of points and rewards.

Effects of Customer Retention

When businesses manage to convince customers to stay and purchase repeatedly, they experience great benefits.

• 52% of customers would make an effort to buy from their favorite brand. (Zendesk, 2020)
• There is a 60% to 70% chance of selling to an existing customer. (SmallBizGenius, 2021)
• 80% of profits come from 20% of customers. (SmallBizGenius, 2021)
• Current customers are 50% more likely to purchase new products and 31% are more likely to spend more. (Invesp, 2020)
• Loyal customers are gold: they are worth 10x more than the value of their first purchase. (Invesp, 2020)
• 67% – that is how much the spending of a loyal customer increases in their 31st to 36th month of doing business with a brand. (Invesp, 2020)
• 78% of consumers are more likely to stay with a brand that has a loyalty scheme. (Bond, 2020)

What emerging technologies can improve customer retention strategies?

With rapid technological advancements, companies can leverage emerging technologies to further enhance customer retention efforts. Incorporating innovative tools and approaches can help businesses stay competitive, meet evolving customer expectations, and foster loyalty.

• Artificial Intelligence and Machine Learning
  AI-driven analytics can provide personalized customer insights, helping businesses predict buying behaviors, recommend products, and personalize marketing efforts. AI tools can also analyze customer sentiment from social media or feedback forms, allowing proactive responses to retain at-risk customers.
• Predictive Analytics for Churn Reduction
  Predictive analytics can identify customers at risk of churning by analyzing behavioral data and previous interactions. This allows businesses to engage proactively with tailored offers or interventions to encourage continued loyalty.
• Omnichannel Communication Platforms
  Integrating chatbots, social media, email, and SMS into a unified communication platform ensures seamless customer interactions. This omnichannel approach enhances convenience and meets customers where they are, improving satisfaction and retention rates.
• Augmented Reality (AR) and Virtual Reality (VR) for Interactive Experiences
  AR and VR technology can provide immersive product experiences, particularly useful for sectors like retail and real estate. These tools create memorable interactions that increase customer satisfaction and likelihood of return.
• Blockchain for Loyalty Programs
  Blockchain technology provides a transparent, secure way to manage loyalty programs. By using tokenized rewards, businesses can simplify redemption processes and even enable cross-brand partnerships, making loyalty programs more appealing and convenient.

For Customer Retention, Weighing Crucial Factors is Key

Numerous factors come into play with regard to customer retention. It has to do with their satisfaction with the quality of businesses’ products or services as well as the overall experience they offer. On top of that, consumers take into account the customer service provided by an organization in deciding whether to stay or to switch brands.

This is why it is important to pay attention to the customer’s journey and to provide them with the best customer experience. When that is improved, companies can better convince clients to stay with them. Efforts to win new customers can get a boost, too, as happy clientele recommend businesses they like to other consumers.

Moreover, as the numbers above show, having a stellar loyalty program helps in convincing customers to stay. If a gamification strategy works with students, it works with consumers, too, as gamification trends show.

With the right mix of strategies, you can build better relationships with customers and inspire loyalty from your clientele.

Key Insights

• Cost of Customer Acquisition vs. Retention:
  • Acquiring new customers costs five times more than retaining existing ones.
  • Increasing customer retention by 5% can significantly boost revenue.
• Customer Churn Rates:
  • Customer churn can reach up to 30% in some global markets.
  • Industries like financial/credit and cable experience high churn rates of 25%.
• Effectiveness of Retention Strategies:
  • Email marketing is the most effective channel for customer retention, with a 56% effectiveness rate.
  • Social media marketing and content marketing follow with effectiveness rates of 37% and 32%, respectively.
• Customer Experience Impact:
  • 59% of customers with a bad experience decrease or stop purchasing from a brand.
  • Positive customer experiences significantly increase the likelihood of repeat purchases.
• Customer Expectations and Adaptation:
  • 88% of customers expect faster digital transformation due to COVID-19.
  • There is a growing demand for personalized products and services, especially among Gen Z customers.
• Importance of Customer Service:
  • 71% of consumers make purchase decisions based on the quality of customer service.
  • Convenience is a top priority for customer service, with 76% of Gen Zers prioritizing it.
• Loyalty Programs:
  • Over 90% of businesses in the US have loyalty programs.
  • Loyalty programs influence 69% of buyers’ decisions.
  • Consumers frequently adjust their spending to maximize loyalty points.

FAQ

1. Why is customer retention more cost-effective than acquiring new customers? Customer retention is more cost-effective because it requires less financial investment compared to acquiring new customers. It costs five times more to acquire a new customer than to retain an existing one. Additionally, loyal customers are more likely to make repeat purchases, which boosts revenue.
2. What are the common reasons for high customer churn rates in certain industries? High customer churn rates in industries like financial/credit and cable can be attributed to intense competition, poor customer service, and a lack of personalized experiences. Customers often switch to competitors offering better service, lower prices, or more attractive loyalty programs.
3. How does email marketing contribute to customer retention? Email marketing is highly effective in retaining customers because it allows businesses to communicate directly with their audience, offer personalized content, and provide timely promotions and updates. With a 56% effectiveness rate, it helps maintain customer engagement and fosters loyalty.
4. What role does customer experience play in retaining customers? Customer experience is crucial for retention as it influences a customer’s decision to continue doing business with a brand. Positive experiences lead to higher customer satisfaction, increased repeat purchases, and positive word-of-mouth recommendations, while negative experiences can drive customers away.
5. How has the COVID-19 pandemic affected customer expectations? The COVID-19 pandemic has accelerated the demand for digital transformation, with 88% of customers expecting faster digital adoption. It has also heightened the need for personalized experiences and more flexible engagement methods, as consumers seek convenience and responsiveness from brands.
6. Why is customer service essential for customer retention? Customer service is vital for retention because it directly impacts customer satisfaction. High-quality service can lead to repeat purchases, while poor service can drive customers to competitors. Convenience, responsiveness, and effective problem resolution are key factors in providing excellent customer service.
7. How do loyalty programs influence customer behavior? Loyalty programs influence customer behavior by incentivizing repeat purchases and encouraging customers to spend more to earn rewards. They enhance customer satisfaction and loyalty, as customers feel valued and appreciated. Additionally, loyalty programs can drive word-of-mouth recommendations and attract new customers.
8. What strategies can businesses implement to improve customer retention? To improve customer retention, businesses can focus on enhancing customer experience, providing excellent customer service, personalizing interactions, and implementing effective loyalty programs. Utilizing CRM software and leveraging data analytics can also help in understanding and meeting customer needs more effectively.

References:

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13. Zendesk. (2020). Zendesk customer experience trends report 2020. Zendesk.
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By Jenny Chang

Jenny Chang is a senior writer specializing in SaaS and B2B software solutions. Her decision to focus on these two industries was spurred by their explosive growth in the last decade, much of it she attributes to the emergence of disruptive technologies and the quick adoption by businesses that were quick to recognize their values to their organizations. She has covered all the major developments in SaaS and B2B software solutions, from the introduction of massive ERPs to small business platforms to help startups on their way to success.