Average Customer Retention Rate by Industry and Other Stats

Customer retention is one of the critical segments that determines whether a company stays in business or not. If you manage to understand the average customer retention rate by industry, you can benchmark your company’s performance easier and identify weak spots in your retention strategies.

Although customer retention rates across industries vary based on competition, market dynamics, a company’ business goals, and customer expectations, there are certain guidelines that you can follow to determine the quality of your retention rates compared to the competition.

In the following article, we will include a list of the crucial retention statistics in various industries, including explanations and predictions, from IT and e-commerce to SaaS and media, but also pinpoint some general rules that are applicable to all industries.

Average Customer Retention Rate by Industry

Retention rate of 80 percent and above is considered to be a strong one. When it comes to average churn rate by industry, 5-7 percent is considered acceptable and not too threatening to business health. However, in industries where competition is extremely fierce and customer loyalty is difficult to maintain, like SaaS or telecommunications, the churn rate can go even higher and still be perceived as “normal” or expected.

Only satisfied customers who have a positive customer experience stay with a single brand for a prolonged period of time. The best way to understand customer retention is to first understand which factors can contribute to customer satisfaction and loyalty.

• Customer success
  • If you manage to help customers achieve their goals and address their pain points, there is a great chance they will stay with your brand. Use customer success platforms like Akita to perform customer segmentation and get to know what your customers need based on their preferences and interactions, track their health scores, and set automated triggers for accounts that require some extra care.
• Customer service
  • Multiple customer retention statistics show clearly that customer service is one of the key factors for customer retention. Personalized customer service makes the customers feel valuable and respected, while generic ones will encourage them to churn. SaaS retention rates depend heavily on customer service, as they usually require extra guidance to achieve desired objectives. 
• Customer expectations
  • if you manage to meet and exceed customer expectations, you motivate them to continue purchasing from you or sticking to your brand. 
• Customer experience
  • Certain customer retention stats show that customers who have even a single bad experience will switch to a competitor. According to Zippia, 72 percent of customers are going to switch to an alternative after one bad experience. Therefore, it is easy to determine that ensuring customers a positive experience from the initial sign-up and onboarding is paramount.

Now, let’s see customer retention rates by industry:

Customer retention and customer churn are two diametrically opposed aspects, yet equally important for business growth and health. We already mentioned that the average customer churn rate by industry goes from 5-7 percent in ideal conditions, yet some industries are more threatened than others. For example, the data from 2020 shows that industries like travel, financial, general, and online retail all had a churn rate above 20 percent. 

Most Crucial Customer Retention Statistics You Should Know in 2024

• Three out of ten customers stay with a single brand for more than a year. The average customer retention percentage in e-commerce is somewhere around 38 percent.
  • (Sprinklr)
• 44 percent of companies don’t calculate their retention rate
  • (Customer Gauge)
• The highest retention rates (84 percent) are calculated by professional services and the media.
  • (Exploding Topics)
• The average customer retention rate across all industries ranges from 70 percent to 80 percent.
  • (Shopify)
•  IT and software industry have a retention rate of 77 percent, while IT services have a retention rate of 81 percent,
  • (Exploding Topics)
• Financial services and telecommunications companies have average customer retention rates of around 78 percent.
  • (Exploding Topics)
•  In the US, the credit and financial sectors have the highest churn rate at 25 percent.
  • (Exploding Topics)
• Customer service is perceived to be a key factor in retention rates by 89 percent of businesses.
  • (Service Bell)
• 55 percent of customers said that they abandoned the platform because they didn’t know how to use it properly.
  • (Wyzowl)

Top 9 Customer Retention Stats: Explained

Now, let’s go over each statistic with more details and context. 

1.Three out of ten customers stay with a single brand for more than a year. The average customer retention percentage in e-commerce is somewhere around 38 percent. 

It is quite challenging for e-commerce companies to have high customer retention rates as the market is expanding by the day. 

Personalized product or content suggestions, loyalty programs, and prompt customer support on multiple digital channels (social media, email, and chat) can help you encourage customers to stay with you and improve customer lifetime value (CLV).

2.44 percent of companies don’t calculate their retention rate 

This is a very disappointing statistic, as customer retention is key to business sustainability and revenue growth. 

If we consider the stat that companies have a 60 to 70 percent of chance of selling to an existing customer, while for new customers percentages go from 5 to 20 percent, it is easy to determine that focusing on customer retention can ensure the growth and stability companies strive for.

Here is a guide on calculating the retention rate if you have the necessary data and if you want to do it yourself.

3.The highest retention rates (84 percent) are calculated by professional services and the media.

The highest retention rates for media and professional services are justified by their substantial marketing budgets, which allow them to target large customer bases. 

Although IT services come with a slightly lower retention rate of 81 percent, the segment that links both industries is social media, which is used worldwide very frequently.

4.The average customer retention rate across all industries ranges from 70 to 80 percent. 

If we calculate the average retention rates from the industries we mentioned before, the rate is 75 percent. The lowest is noted in hospitality (due to the high employee turnover, increased prices, and difficulty building loyalty), while the highest in media and professional services.

5.IT and software industry have a retention rate of 77 percent, while IT services have a retention rate of 81 percent. 

The explanation lies in the fact that IT services deal with the maintenance and management of technology infrastructures, while software involves the customization and creation of applications.

It is crucial for IT services to invest in customer service, while software and IT must invest in multiple departments equally to ensure customer satisfaction and loyalty.

6.Financial services and telecommunications companies have average customer retention rates of around 78 percent.

A strong brand image is one of the key drivers of high financial services’ retention rates.

7.55 percent of customers said that they abandoned the platform because they didn’t know how to use it properly.

This is why it is crucial to invest in onboarding in SaaS, as customers expect to derive value from your product in the shortest time possible. According to Tsia.com, In 2020, over 90 percent of companies pointed out that they have dedicated customer success roles, compared to the numbers from previous years when customer success roles were situated between 50 and 70 percent. It is predicted that the companies will continue investing in customer success due to its positive effect on retention.

8.In the US, the credit and financial sectors have the highest churn rate at 25 percent. 

The highest churn rate in the financial and credit sectors in the U.S. goes to the financial/credit sector, which means that almost a quarter of customers end their relationships with insurance agencies, credit unions, and banks.

9.Customer service is perceived to be a key factor in retention rates by 89 percent of businesses.

This is one of those customer retention statistics that is easy to understand, as customer service is certainly one of the key aspects of customer retention.

Conclusion

Understanding the average customer retention rate by industry is crucial for companies to gauge their performance and set realistic expectations and targets. Although the average customer retention rate varies dramatically from industry to industry, the aim is to reach 80 percent or higher.

If we consider all the statistics we covered, we can determine that customer experience is one of the main segments that drive customer retention. This is why it is crucial to learn more about your customers’ preferences and needs, and this is where a customer success platform like Akita can help you. Once you understand their specific requirements, you can create effective retention strategies using customer retention tools to drive more satisfaction and loyalty.

Resources:

• Sprinklr
• Customer Gauge
• Exploding Topics
• Shopify
• Service Bell
• Wyzowl