Customer Retention vs Retention Statistics (2023)

Customers have become the backbone of any organization. Organizations would not exist or even survive in this competitive global market if they did not have customers. Customer retention is the main target for marketers in today’s world because it plays a critical role in profitability, growth, and brand perception. If an organization does not focus on customer retention but instead focuses solely on expanding its customer base, it is potentially losing out on repeat customers. While every business needs to acquire new customers, once they have them, they must focus on marketing efforts toward retaining as many of them as possible. 

A customer retention-focused strategy is one of the most effective marketing strategies for the business. If loyal customers become brand ambassadors, they’ll refer more; hence, CAC (Customer acquisition cost) will be lower if a company has more loyal and satisfied customers. Below are some critical customer retention stats every business marketer should know about.

Customer Retention Stats Highlights

1. It costs up to 7x more to acquire a new customer than to retain an old one.
2. The probability of selling to an existing customer is 60-70% while selling to a new prospect is 5% to 20%.
3. An average company loses 23% to 30% of its customer base yearly due to a lack of customer loyalty.
4. 65% of a company’s revenue comes from its existing customers.
5. Loyal customers spend up to 67% more.

Customer Retention - Key Statistics

It costs up to 7x more to acquire a new customer than to retain an old one.

The first rule of any business should be to retain customers and build a loyal customer base. Experts say that efforts to increase customer retention should take priority over customer acquisition for almost all businesses at almost all times. Without a dependable base of repeat customers, organic growth and longevity are impossible - regardless of how many new customers you bring in the door. 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.

The probability of selling to an existing customer is 60-70%, while selling to a new prospect is 5% to 20%.

Loyal customers yield higher conversion rates, making them easier to sell to. Research shows that existing customers have an average conversion rate of around 60% to 70%. That’s massive compared to new customers' 5% to 20% conversion rate. In other words, a company gets more value from loyal customers visiting their e-commerce store. If customers have enjoyed previous purchases and feel loyalty towards the brand, it’s relatively easy to convince them to buy other products as well. Customer loyalty generates an ongoing sales cycle that drives the e-commerce store's profits.

An average company loses 23% to 30% of its customer base yearly due to a lack of customer loyalty.

As per recent research, a typical business organization will lose around 23% to 30% of its customer base each year. Many business organizations tend to spend their entire advertising and marketing budget each month attempting to gain new customers. They forget about those customers they already have, who could refer their friends, family, and colleagues to the business if they were properly induced to do so. As we all know, high-quality service is a prerequisite to retaining and attracting customers, this will help to increase the customer ratio and minimize the average company losses.

65% of a company’s revenue comes from its existing customers.

According to Markinblog post, almost 65% of a company's business comes from repeat customers, while focusing on increasing customer retention by 5% can increase profits by 25% to 95%. The more loyal an individual becomes to a business, the more likely they will

try new products or bring in new customers. If customers have enjoyed previous purchases and feel loyal to the brand, it becomes relatively easy to convince them to buy other products as well. Good service toward regular customers generates an ongoing cycle of sales that drives the profits of the e-commerce store. All in all, regular customers are essential for any e-commerce success. It helps the company or any business organization save on marketing and customer acquisition costs, build referrals, and increase sales. 

Loyal customers spend up to 67% more.

Customer loyalty is about establishing longer and more sustainable relationships. Loyal customers are one of the most valuable assets of any e-commerce business. There are only benefits to having a loyal customer. Keeping customers loyal is one of the most effective ways to grow any business. That’s because loyal customers return to spend more money with the same business as they grow to trust the brand. The research found that the top 10% of loyal customers spend three times more per order than the other lower 90% of customers. So loyal customers will have a greater lifetime value than customers that are simply buying out of convenience.

Other Customer Retention Stats

• 81% of customers make purchasing decisions based on how much they trust a brand.
• Happy and satisfied customers are 87% more likely to purchase upgrades and new services.
• 91% of customers are more likely to buy from brands that provide them with meaningful and relevant offers.
• Existing customers are 50% more likely to try new products and spend 31% more than new customers.
• 13% of unhappy customers will share their experiences with others.
• 84% won’t return to a retailer if they’ve had a poor experience returning a product.

Conclusion

To conclude, having the right customer retention strategy will keep the company growing. For any e-commerce business organization, customer retention is critical to the profitability of their business. Regular customers are willing to stick around and spend their money on their favorite brand's product as long as the company keeps delivering the expected quality. It’s much more efficient to re-engage an existing loyal customer than recruit a new one. So customer retention can save any business a significant amount of marketing costs.

That’s why it’s important to put time and energy into retaining existing customers and encouraging their commitment to the brand. If the customers feel like they are valued, they will become increasingly loyal to the brand.

Sources

https://www.markinblog.com/customer-loyalty-retention-statistics/

https://www.semrush.com/blog/customer-retention-stats/

https://www.annexcloud.com/blog/21-surprising-customer-retention-statistics-2021/

https://sixads.net/?s=customer+retention

https://www.smallbizgenius.net/by-the-numbers/customer-loyalty-statistics/