Focus on customer retention to see higher profits, lower churn, and a stronger business. 

• Customer retention leads to higher sales at a lower cost and saves you from the expense of new customer acquisition.
• Most customers expect efficient, personal service but are open to companies’ use of AI and other technology. 27% of leaders call AI the most impactful customer experience technology.
• According to 47% of organizations, prioritizing the customer experience gives your business a competitive edge and drives profits.
• Loyalty is key, with 84% of customers recommending brands based on excellent customer service. Loyalty programs effectively increase retention.

Several data points provide insight into the benefits of retaining customers. Not only is customer retention ultimately less costly than acquiring new customers, but you’re also more likely to successfully sell to existing customers.

1. The success rate of selling to an existing customer is 60% to 70%, but only 5% to 20% to a new customer. (OutboundEngine)
2. Retaining an existing customer can cost five times less than acquiring a new one. (Invesp)
3. The average customer retention rate by industry varies, with the highest retention rates seen in media and professional services (84%). The lowest is hospitality, travel, and restaurant, at 55%. (Zippia)
4. 35% of customers decrease their spending after a bad experience with a brand, and 15% say they stop shopping with them completely. (Qualtrics XM Institute)
5. In the U.S., $840 billion in sales is at risk due to customers cutting back or ceasing spending. (Qualtrics XM Institute)
6. 70% of consumers will switch to a brand with better product quality. (Forbes)
7. 95% of customers say their trust in a company makes them more likely to be loyal. (Salesforce)
8. The last decade has brought a 222% increase in customer acquisition costs. (SimplicityDX)
9. Customer retention rates average 72.5% across industries. (CustomerGauge)
10. 59% of respondents said they’d stop doing business with a company after a hacking or data loss incident, with 47% saying personal information safety is critical. (ServiceNow)
11. Personalization is key to retention, but just 13% of consumers feel they experience highly personalized interactions with brands. (ServiceNow)

12. 27% of leaders say AI is the capability that provides the greatest reduction in customer effort. (ServiceNow)
13. The CRM software market is expected to grow 14% through 2025. (Gartner)
14. The CRM market is expected to reach $80B by 2028. (Futurum Group)
15. The number of CRM providers grew 9% from 2018-2023. (IBIS World)
16. 90% of mid-sized businesses report using a CRM system. (CIO)
17. 98% of CRM buyers prioritize systems with sales automation features. (Capterra)
18. 92% of businesses see CRM software as essential for reaching revenue goals. (REVE Chat)
19. 72% of companies use CRMs to track customer interactions and strengthen relationships. (Adam Enfroy)
20. 71% of manufacturers and 75% of business services firms have adopted CRM usage. (Forrester)
21. 45% of companies saw improved revenue by using CRM software. (Capterra)

Customers with a positive experience are more likely to be loyal, and retention can boost your revenue and profit. Simply increasing retention by a small amount can skyrocket profits, making it a crucial part of a successful strategy.

22. 47% of experience organizations say a strong experience strategy gives them a competitive edge. (ServiceNow)
23. Increasing customer retention by 5% can grow profits by more than 25%. (Bain & Company)
24. 46% of customers will spend more when they receive a personalized experience. (Forbes)
25. 8% of customers create 41% of e-commerce stores’ revenue, and the top 5% of customers generate 35% of revenue. (Smile.io)
26. Loyal customers spend 33% more per order compared to others, driving revenue. (Flowium)
27. Businesses that excel at customer segmentation see 10% to 15% higher profits than those that don’t. (The Clueless Company)
28. SaaS companies with strong customer success teams see 50% faster revenue growth than others. (McKinsey)
29. Strong customer experiences increase sales revenue by 2% to 7% and profitability by 1% to 2%. (McKinsey)
30. Shareholder return can increase by 7% to 10% with strong customer experience and retention. (McKinsey)
31. 50% of companies reported an ability to track the financial benefits of customer experience, with 80% anticipating staying competitive based on customer experience. (Gartner)

32. 69% of customers note a likelihood to switch brands based on a poor customer service experience. (ServiceNow)
33. 48% of consumers will pay more for quality customer service. (Forbes)
34. 73% of consumers say they’d like to share feedback after a customer service interaction; they’re more likely to do so if they had a positive experience. (BusinessWire)
35. 69% of customers desire human interaction when it comes to customer service. (ServiceNow)
36. 94% of customers said positive customer service made them more likely to purchase again; 82% would recommend a company based solely on customer service. (Statista)
37. The average response time for customer service requests is 12 hours and 10 minutes. (SuperOffice)
38. 62% of businesses don’t reply to customer service emails. (SuperOffice)
39. Generative AI can enable at least a 10% increase in customer self-service. (ServiceNow)
40. The cost of poor customer service could be as high as $3.7 trillion annually. (Forbes)
41. 72% of customers want immediate service. (Zendesk)
42. 51% of baby boomers call companies directly to resolve customer service issues. One-third of them find the experience akin to "stubbing their toe" or "going to the dentist." On the other hand, 44% of Gen Z—who are most likely to search online for help—feel it's like receiving expert advice. (Oracle)

As more companies work to automate parts of the customer experience with AI or other tools, customers seem to be responding well. A majority of consumers report being open to engaging with AI or sharing personal information as long as they receive personalized, speedy service. A good customer experience makes all the difference, leading to recommendations, higher sales, and reduced costs.

43. 47% of AI pacesetters have leveraged technology to increase customer engagement. (ServiceNow)
44. 69% of customers must move between two or three channels to get an issue resolved. (ServiceNow and Qualtrics)
45. 73% of customers note customer experience is a major factor in their purchasing decisions, often behind price and quality. (PWC)
46. 86% of customers approve of brands leveraging AI for customer experience. (Forbes)
47. Half of customers are open to sharing personal information if it results in a more personalized customer experience. (Forbes)
48. Customers desire personalized experiences like offers and discounts (53%), product recommendations (48%), and text message marketing (46%). (Forbes)
49. 62% of businesses don’t calculate the ROI of their customer experience programs. (CustomerGauge)
50. Customers who have a positive experience are likely to spend 140% more than those who have a negative experience. (Deloitte)
51. After a positive experience, customers tell nine others, on average. They tell 16 people about a negative experience. (Deloitte)
52. Providing a positive experience can reduce customer service costs by up to 33%. (Deloitte)
53. Almost 80% of Americans say the most important aspects of a positive customer experience are speed, convenience, knowledge, and friendly service. (PWC)

54. 84% of customers say they’ll likely recommend a brand based on excellent customer service. (ServiceNow)
55. When it comes to maintaining loyalty to a brand, 67% of Gen Z and 73% of millennials find the brand’s purpose important. It’s less so for Gen X (55%) and baby boomers (46%). (AdWeek)
56. 78% of U.S. consumers are willing to pay more for brands they’re loyal to, compared to 63% of global consumers. (AdWeek)
57. Existing customers are 50% more likely to try new products and spend 31% more than new customers. (Forbes)
58. 91% of U.S. consumers want brands to earn their loyalty by making an effort to provide individualized treatment and service. (AdWeek)
59. More than three-quarters (80%) of consumers in the U.S. expect the following if a brand is to retain their loyalty: customer service, data privacy, quality products, and options and availability. (AdWeek)
60. 64% of customers said regardless of how much they like a product, they’ll find another company if they don’t receive good service. (Forbes)
61. 77% of consumers feel less loyal to brands today than a few years ago. (CustomerGauge)
62. When engaging with a company, 67% of customers prioritize quality, 64% look at price, 51% prioritize customer service, and 47% focus on loyalty or rewards programs. (Snappy)

As the economy continues to show signs of uncertainty, loyalty programs are a helpful way to increase customer loyalty without extensive spending. Most customers engage with personalized offers and have signed up for at least one loyalty program already.

63. The worldwide loyalty management market is forecast to reach $28.65 billion by 2030 (Fortune Business Insights)
64. Half of U.S. consumers are more likely to engage in a loyalty program year over year, 25% higher than global consumers. (AdWeek)
65. 84% of U.S. customers are likely to engage with a personalized offer that is tailored to their interests. (AdWeek)
66. 80% of U.S. consumers belong to at least one loyalty program. (LendingTree)
67. American consumers belong to 16.6 customer loyalty programs on average, only actively using half. (Statista)
68. Users sign up for loyalty programs for incentives: earning points (75%), discount codes/coupons (66%), and accessing special deals (56%). (LendingTree)
69. 70% of consumers prioritize brands with loyalty programs. (Snappy)
70. Women (71%) are more enticed by discount codes and coupons than men (60%. (LendingTree)
71. While 72% of customers report shopping more often at companies with loyalty programs, only 52% say they actually spend more because of them. (LendingTree)

Average customer retention rates vary by industry, and it can be challenging to pinpoint an exact retention rate for a specific industry due to variances in benchmarking and data. However, general averages can be seen below: 

• SaaS: 90%
• Media: 84%
• Insurance: 83%
• Fintech: 78%
• Banking: 75%
• Edtech: 75%
• Retail/E-commerce: 63%
• Hospitality: 55%

These customer retention statistics illustrate why focusing on retention is imperative. Fostering a long-term relationship with customers means spending less on acquiring new ones, and loyal customers are likely to purchase more often. 

If you’re looking to find ways to create a better customer experience, we can help. Check out a demo to get started, or contact us to learn how ServiceNow can grow customer retention.

How does customer retention relate to customer experience?

Customer experience can directly impact customer retention, as those with a positive experience are likelier to remain loyal customers. That’s because customers who receive personalized service, speedy support, and efficient service feel valued and respect your brand. There are plenty of ways to adopt more efficient customer service, one of which is to focus on digitizing the customer experience.

How can a business build a customer service department focused on retention?

To create a customer service department that’s focused on retention, follow the seven building blocks of customer service. Train your team to deeply understand the customer journey, then ensure consistency across all customer interactions. That consistency shouldn’t come at the cost of authenticity, however.

To further streamline the service you offer, analyze data to understand problems customers try to solve themselves—you can leverage AI agents or other automation to help solve them. These can complete repetitive tasks to free time for human agents.

Stay abreast of the customer journey, using tailored workflows and personalization to meet their needs. Finally, arm your agents—and your broader organization—with the right tools and knowledge to positively influence the customer experience.

Can customer experience and retention impact business finances?

Customer experience and retention can boost financial results. First, retaining existing customers is much less costly than constantly searching for new ones. Once you’ve got loyal customers, they’re more likely to buy from you and speak positively to their network, thus bringing in additional business for you for low or no marketing spend.

On the flip side, a poor customer experience leads to lower retention, which means you’ll spend more trying to acquire customers and mitigate possible reputational damage.

What is total experience, and why does it matter?

Total experience is the combination of customer and employee experience. Improving one has a positive impact on the other, and companies that focus on total experience outperform those that don’t. A strong total experience results in higher revenue, better customer retention, and stronger customer service and customer attraction. Employees at these organizations see increased loyalty, stronger teamwork, and better health and safety.

How does customer retention relate to customer experience?

Customer experience can directly impact customer retention, as those with a positive experience are likelier to remain loyal customers. That’s because customers who receive personalized service, speedy support, and efficient service feel valued and respect your brand. There are plenty of ways to adopt more efficient customer service, one of which is to focus on digitizing the customer experience.