28 Customer Retention Stats (+8 Strategies You Can Use)
Some of these stats are pretty f*cking wild
Bryan Curley
March 18, 2024
Did You Know? The probability of selling to an existing customer is 60-70% while the probability of selling to a new customer is 5-20%. (Source)
Happy Monday, Marketers!
If you’re anything like me, then you probably like making data-driven decisions.
(And because you subscribe to a newsletter that I write called Data-Driven Marketing, I’m gonna guess we’re cut from the same cloth.)
Well, one of the biggest decisions we make every moment of every day is which activities we’re going to spend our valuable time on.
For Bryan The Human, that usually means trying to fight off my almost impossible-to-control, ADHD-fueled “impulse projects” that I know I’m never going to finish and to which I’ve lost many weekends entire weeks.
This is me right after purchasing yet another domain name for an idea that I already know I’m going to get way too immersed in at the expense of everything else in my life:
For Bryan The Marketer, that usually means focusing on tasks related to optimization and retention, because data unequivocally shows substantially better ROIs on time and other resources dedicated to those activities. We explored that in last Monday’s email about above-the-fold optimization for websites and search results.
Let’s kick this week off in a similar manner with some stats around optimization and retention followed by some areas where you can apply this thinking.
The data around customer retention vs. acquisition
The probability of selling to an existing customer is 60-70% while the probability of selling to a new customer is 5-20%. (Source)
Existing customers are 50% more likely to try new products and spend 31% more than new customers. (Source)
65% of the average company’s revenue comes from existing customers. (Source)
Just a 5% increase in customer retention rates can mean a 25-95% increase in profits. (Source)
70% of marketers and business owners agree that it’s cheaper to retain an existing customer than to acquire a new one. (Source)
44% of companies have a greater focus on new customer acquisition vs. 18% that focus on retention. (I have no idea what the other 38% are doing.) (Source)
76% of companies see Customer Lifetime Value (CLV) as an important concept for their organization, but just 42% can measure it accurately. (Source)
Retention rates vary by industry but range from a low of 4% in Edtech to a high of 84% in insurance with many coming in between 30-60%. (Source).
For SaaS companies specifically, the monthly customer churn rate is 3-5% for smaller businesses vs. just 1% for enterprises. (Source)
What makes customers stay?
All of that data is wonderful, but it’s meaningless unless we actually apply it. Let’s do that. Here are some ways you can improve customer retention (with more data, obv).
Offer discounts and create loyalty programs
53% of consumers say discounts and loyalty points make them stay with a brand longer. Women are more likely than men to belong to a loyalty program, 68% vs. 59%.
Optimize your high-value and already-performing content
I won’t focus on this too much because it’s the subject of last Monday’s email on above-the-fold optimization, but it would be reckless of me not to mention it.
Service, service, service!
An overwhelming 96% of buyers mention customer service as a primary factor behind loyalty, and 92% of customers trust peer recommendations. Add that up, and it becomes obvious how important it is to provide an excellent experience to both the new customers you’re trying to earn but also the existing customers you’re trying to keep.
Best of all, customer service really comes down to effort and empathy. Qualitrics offered the following 10 suggestions to improve your customer service:
Practice active listening
Learn to empathize with your customers
Use positive language
Improve your technical skills
Know your products and services
Be human
Communicate clearly
Be solutions-focused
Admit mistakes
Be willing to learn
If you’re in a leadership position at your company, that article also has some strategies to improve your organization’s competency around these things.
Be real
Qualitrics touched on it above with suggestion number 6, but I’ll reiterate it here: Be human. Be real.
That might not universally apply in the same way, in the sense that some industries expect more formality and professionalism, but even then, people still like dealing with a human.
Gen Z is rising, and they’re placing more emphasis on brand authenticity and transparency with between 25-32% viewing those factors as an key part of their buying process, which is important because Gen Z also is increasingly distrustful of and disloyal to brands that do them dirty.
Improve your self-service experience
It’s great when you or your customer service team can personally assist a customer who’s grateful to have their issue resolved. It’s even better when the customer can do it themselves.
Invest in a better self-service experience through your website, app, call support system, or whatever. If you have a technical product, develop robust and easily searchable documentation and tutorials. If you have an e-commerce product, make the return process easy. If you have a subscription product, do not make it a nightmare to cancel.
Me every time I’ve tried to cancel a gym membership:
Gif by thelonelyisland on Giphy
Upsell and cross-sell
People buy based on emotion. If they’re making a purchase, they’re more likely to make an additional purchase, especially if they feel like they’re getting a good deal. 60% of consumers prefer bundle deals, which means Jake From State Farm is a busy man.
Shoutout to the OG.
Follow up with abandoned carts
While it varies by industry and price point, a whopping 70% of shopping carts are abandoned. I’m always blown away by that number…until I realize my personal abandonment rate when I’m a consumer easily is north of 90-95%. (Sorry, it was the ADHD.) Optimize your automated cart abandonment sequences, focusing on personalization. Maybe even offer some of those sweet, sweet discounts people love.
And this doesn’t just apply to abandoned carts in the e-commerce sense. I also do it with this newsletter. I require a double opt-in to join this community, but only 50-70% of people actually click the “confirm” link that gets sent to their email address.
I configured an automated email to be sent 2 days later to those who don’t confirm their subscription, which sometimes works. After that, I send a personal email thanking them for initially subscribing and sending them some links to newer content in a final pitch to get them to subscribe. It works about two-thirds of the time and is far easier than trying to drum up new business.
Btw, thanks for clicking that link, y’all.
Repurpose existing content
Between blogs, emails, YouTube, various social media networks, and more, there are almost too many ways to engage with your target audience. Content is costly to produce, so repurpose it as many times as you can:
Cut long webinars into multiple smaller bites to be published on YouTube.
Extract tweetable (X-able?) bits from long-form articles and tweet them (X them?).
Turn your amazing tutorial content into a 7-day email marketing sequence that you send to your customers after they purchase.
Review all of the customer questions you’ve answered through email or on social media and create a robust FAQ section.
The possibilities truly are endless in the closest-thing-to-literal-without-actually-being-literal sense of the word.
If you have any customer retention or process optimization strategies that you use successfully, reply to this email to share them with us! Seriously, I want to know.
Everyone say, “Hi!” to Adrian W 👋
Question: If you could have any superpower, but it had to be completely useless, what would it be?
Answer: “I shoot out light beams when I sneeze that illuminate my surroundings but only for that split second when my eyes are closed and I can’t see anything anyway.”
How do you people think of this stuff?
ChatGPT-Generated Joke of the Day 🤣
What do you call fake spaghetti?
An impasta!
Suggest a topic for a future edition 🤔
Got an idea for a topic I can cover? Or maybe you’re struggling with a specific marketing-related problem that you’d like me to address?
Just reply to this email and describe the topic.
There's no guarantee I'll use your suggestion, but I read and reply to everyone, so have at it!