If you’re on a mission to boost customer retention, you’ve probably crunched the numbers to figure out your customer retention rate (CRR)—the percentage of customers who come back for more over a given period. But knowing your CRR is just the beginning. To truly understand how you’re doing, you need to see how your retention rates stack up against others in your industry.
In this article, we’ll dive into the average customer retention rates by industry, giving you the insights you need to take your customer retention game to the next level.
How to calculate customer retention
If you haven’t yet identified your business’s customer retention rate, you can use the following formula to do so:
Customer retention rate = [(customers at the end of the period – customers acquired during the period) / customers at the start of the period] x 100.
Let’s say you own an online houseplant store and want to determine your retention rate over a six-month period. At the beginning of this period, you had 150 customers. By the end, you had 120 customers, having acquired 5 new customers during these six months. Here’s how you’d calculate your CRR:
[(120 – 5) / 150] x 100 = 76.67%
So, your customer retention rate over the six-month period is approximately 76%. Ahead, you can find averages per industry to help you contextualize that number to determine whether your CRR is on track.
What is the average customer retention rate by industry?
- Media companies
- Professional services
- Automotive and transportation
- Insurance
- IT services
- Construction and engineering
- Financial services
- Telecom
- Health care
- Software
- Banking
- Customer services
- Manufacturing
- Hospitality
- Ecommerce
Customer retention rates vary significantly across different industries, typically ranging between 70% and 80%. However, these averages can fluctuate widely depending on the specific industry in question.
For instance, the banking industry enjoys a relatively high average retention rate of around 75%. Customers tend to maintain long-term relationships with their banks, often due to the convenience of staying put and the costs associated with switching providers. On the other hand, the hospitality industry, which includes restaurants, has a lower average retention rate of about 55%. Despite frequent dining out, the plethora of choices available to consumers leads to less consistent customer loyalty.
This disparity illustrates that comparing retention rates across different industries can be akin to comparing apples to oranges. Each sector has its unique dynamics influencing how and why customers stay loyal. According to metrics by Statista, here is the average CRR by industry:
Media companies: 84%
Whether it’s television, film, publishing, or digital platforms, maintaining a captivated audience is key. With an impressive customer retention rate of 84%, media companies thrive on their ability to engage viewers and readers consistently through compelling content and innovative delivery methods.
In the highly competitive media landscape, it’s all about sustaining customer satisfaction and fostering loyalty. If your CRR isn’t up to par, here are some strategies to consider:
- Leverage data analytics. Data analytics can improve your understanding of your audience’s preferences and help you tailor content accordingly, thus keeping your visitors clicking on your content.
- Interactive content. Engage your audience with interactive content such as live polls, Q&A sessions, and interactive storylines. This fosters a sense of participation and investment in your content.
- Personalized recommendations. Implement algorithms that provide personalized content recommendations based on viewer history and preferences, enhancing user experience and satisfaction.
Professional services: 84%
The professional services industry—which includes consulting firms, legal services, and accounting businesses—boasts an impressive average customer retention rate of 84%. This high CRR can be attributed to the deep, trust-based relationships that professionals build with their clients over time.
In the competitive landscape of professional services, maintaining customer satisfaction and fostering long-term relationships is crucial for sustainable success. If your CRR isn’t up to snuff, here are a few research-backed strategies for improving it:
- Use a CRM. If you can barely keep track of all of your clients, let alone know them well enough to tailor your services to their needs, customer relationship management (CRM) software could be a huge help. It can help you track client interactions, preferences, and feedback, ensuring that your services reliably meet high standards.
- Request client feedback. There are apps in the Shopify App Store that automates feedback requests, making it easier to collect and analyze customer opinions. Regularly gathering and acting on feedback shows that you value client input and are committed to continuous improvement.
- Connect with clients. People often stick with their hairdressers for years, not just for their skills but for the personal relationships they build. Building strong, trust-based relationships can foster long-term commitments and significantly increase retention rates.
Automotive and transportation: 83%
With a solid customer retention rate of 83%, businesses in this sector excel by delivering reliable services and building trust over time. Whether it’s ensuring timely repairs or providing seamless transport solutions, keeping customers on the move is key.
To maintain and improve this retention rate, consider the following strategies:
- Send regular maintenance reminders. Send automated reminders for vehicle maintenance and service appointments. This not only ensures vehicle longevity but also keeps customers engaged with your services.
- Improve the customer experience. Enhance your customer offering by providing complementary services that add convenience and value. These can include free vehicle pickup and drop-off for service appointments, complimentary car washes with every service, or providing a comfortable waiting area with amenities such as Wi-Fi and refreshments.
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Ask for feedback. It’s likely your customers have specific concerns regarding your business that might make them go elsewhere. Use customer satisfaction feedback to make tangible improvements in your services, whether it’s reducing wait times, improving communication, or addressing any recurring issues.
Insurance: 83%
In the world of insurance, peace of mind is paramount. Boasting a customer retention rate of 83%, insurance companies succeed by fostering trust that they’ll provide support in the face of disasters and emergencies. Clients depend on their insurers to protect what matters most, and maintaining this trust is crucial for long-term loyalty.
To further improve customer retention, consider adopting these strategies:
- Policy review meetings. Schedule regular policy review meetings with clients to discuss their coverage needs and ensure they have the best policies in place.
- Educational resources. Provide clients with educational resources about insurance options, policy benefits, and industry trends so they can better understand the resources at their disposal.
- Claim process transparency. Ensure that the claims process is transparent and easy to navigate with regular updates, exceptional user experience design, and clear communication channels.
IT services: 81%
In the dynamic realm of IT services, staying ahead of technological advancements is vital. With a commendable customer retention rate of 81%, IT service providers thrive by offering robust support and innovative solutions tailored to client needs. Ensuring systems run smoothly and securely keeps clients coming back.
To enhance customer retention, consider these strategies:
- Be proactive with support. Implement proactive IT support to address potential issues before they become major problems. This minimizes downtime and enhances client satisfaction.
- Offer customized solutions. Offer customized IT solutions tailored to the specific needs of each client. Personalized service demonstrates a commitment to meeting client needs and fosters loyalty.
- Conduct regular performance reviews. Keeping an ongoing dialogue with your clients not only shows your commitment to their success but also helps you identify budding issues before they become problematic. Consider scheduling performance reviews with your clients quarterly or semi-annually, depending on the client’s needs and the complexity of the services you provide.
Construction and engineering: 80%
In the construction and engineering industry, building firm foundations isn’t just about structures—it’s about relationships too. With an impressive customer retention rate of 80%, firms in this sector succeed by delivering quality projects and maintaining client trust through every phase of development.
To improve customer retention, consider these strategies:
- Use project management tools.Project management tools will help you make sure you’re completing your projects on time and within budget. This reliability enhances client trust and satisfaction.
- Involve clients. Regular updates and involvement ensure clients feel valued and informed, fostering loyalty.
- Provide post-project support. Post-project support services such as maintenance and troubleshooting will show clients that you’re invested in their success beyond the initial transaction.
Financial services: 78%
The financial services industry—which includes banks, insurance companies, investment firms, and credit unions—boasts an impressive average customer retention rate of 78%. Financial products like mortgages, savings accounts, and insurance policies often come with long-term commitments, plus, the hassle and costs of switching providers can be a big deterrent.
Even with these factors working in favor of financial institutions, there’s always room for improvement. A 2021 study found that financial service companies can boost retention by focusing on customers who live closer to their branches and by offering higher loan amounts relative to the collateral value. These strategies enhance convenience, perceived value, and trust—key elements in keeping customers happy and loyal.
According to a 2020 study of financial services, the following factors play a significant role in customer retention:
- Convenience. Make the customer experience as smooth as possible by streamlining the onboarding process, simplifying your digital platform, offering educational resources, and enhancing your customer support.
- Profitability. Keep your long-term customers engaged by offering incentives like cashback, lower fees, or higher interest rates on savings accounts. These rewards show appreciation and encourage continued business.
- Security. Besides ensuring you have proper protections in place, transparency about product features, fees, and policies is paramount.
- Flexibility. Offer customizable solutions and flexible options that can cater to diverse financial situations. Whether it’s personalized financial planning or adaptable investment options, flexibility can set your service apart.
Telecom: 78%
In the fast-paced telecom industry, keeping the lines of communication open is essential. With a customer retention rate of 78%, telecom companies thrive by providing reliable services and maintaining strong customer relationships. Connectivity and support are key drivers of customer loyalty in this sector.
To improve customer retention, consider these strategies:
- Make your plans more flexible. Customize plans to meet individual customer needs, enhancing satisfaction and retention. Allow customers to upgrade, downgrade, or modify their plans easily based on their usage patterns and preferences, making your services more adaptable to their changing needs.
- Provide 24/7 customer support. Ensure round-the-clock customer support to address any issues or concerns promptly. Quick and reliable support fosters trust and loyalty, showing customers that they can rely on you whenever they need help.
- Enhance network reliability. Invest in infrastructure to ensure minimal downtime and high-quality connections. Regularly update and maintain your network to prevent outages and provide a seamless experience.
Health care: 77%
In health care, the well-being of patients is paramount. With a customer retention rate of 77%, health care providers excel by delivering personalized care and building trust with patients. Long-term relationships are built through compassionate care and consistent, quality service.
To enhance customer retention, consider these strategies:
- Implement patient follow-ups. Develop a system for regular patient follow-ups to ensure continued care and address ongoing health concerns. Personalized attention fosters patient trust and loyalty, showing patients that their well-being is a priority.
- Offer health education programs. Provide health education programs and resources to empower patients with knowledge about their conditions and treatments. Educated patients are more likely to stay loyal to their health care providers, as they feel more in control of their health and confident in the care they receive.
- Focus on patient-centered care. Personalized care enhances patient satisfaction and retention by ensuring each individual feels valued and understood. Consider what you want in a care provider, whether it’s transparent straightforward communication, acknowledging cultural preferences, or offering holistic care that addresses social and emotional well-being, as well as physical care.
Software: 77%
The IT and software industry is at the forefront of innovation, constantly evolving to meet client needs. With a customer retention rate of 77%, companies in this sector succeed by offering cutting-edge solutions and exceptional customer support. To improve customer retention, consider these strategies:
- Provide continuous software updates. Ensure clients can access the latest features and security measures by providing automatic software updates and improvements. This reliability enhances client trust and satisfaction, demonstrating your commitment to maintaining the highest quality and security standards.
- Offer user training programs. Help clients make the most of your software solutions by offering comprehensive user training programs. The more users feel confident and capable using your products, the more likely they’ll be to stick around.
- Assign dedicated account managers. Provide personalized support and promptly address client concerns by assigning dedicated account managers. Personalized support services foster strong client relationships and loyalty, showing clients that their needs are a top priority and ensuring they have a direct point of contact for any issues or questions.
Banking: 75%
Trust and reliability are the cornerstones of customer relationships in the banking industry. With a customer retention rate of 75%, banks succeed by offering personalized financial services and maintaining strong client relationships. Ensuring financial security and providing expert advice keep clients loyal. To boost customer retention, consider these strategies:
- Offer personalized financial advice. Help clients achieve their financial goals by providing personalized financial advice and planning services. This personalized attention fosters trust and loyalty, showing clients that their financial well-being is a top priority of yours.
- Enhance online banking convenience. Ensure your online banking platform is user-friendly and offers a wide range of services. Convenience enhances client satisfaction and retention, making it easier for clients to manage their finances and stay engaged with your services.
- Host financial wellness workshops. Organize workshops, seminars, and online courses focused on financial literacy and wellness. These events can educate clients on managing their finances, investing wisely, and planning for the future, thereby strengthening their trust and loyalty to your bank.
Consumer services: 67%
Consumer service businesses like travel agencies, spas, cleaners, and tutors may have a lower average CRR because of high competition among those offering the services and low switching costs for consumers. Price sensitivity and personal preferences can also come into play, leading customers to shop around. To address these issues, consider the following strategies:
- Offer flexible pricing and packages. Provide competitive pricing and flexible service packages to cater to different customer needs and budgets. Offer discounts for bundled services or long-term commitments to encourage repeat business.
- Implement a referral program. Encourage your existing customers to refer new clients by offering incentives like discounts, free services, or special offers. Referral programs leverage word-of-mouth marketing and reward loyal customers for promoting your business, fostering a community of satisfied clients.
- Provide convenient scheduling and booking. Make it easy for customers to book and manage appointments online. Offer flexible scheduling options to accommodate busy lifestyles and reduce friction in the booking process.
Manufacturing: 67%
With a customer retention rate of 67%, manufacturers succeed by consistently delivering high-quality products and maintaining strong relationships with their clients. Here are some tricks of the trade tha wi’ll help you give your CRR a boost:
- Quality assurance. Implement stringent quality assurance processes to ensure your products consistently meet high standards. Reliability enhances customer trust and satisfaction.
- Product customization. Offer product customization options to meet the unique needs of different customers. Personalized products demonstrate a commitment to customer needs and encourage loyalty.
- After-sales support. Provide comprehensive after-sales support, including maintenance, troubleshooting, and replacement services. Post-purchase support enhances customer satisfaction and retention.
Hospitality: 55%
In the hospitality sector, customer retention stands at 55%. The vast array of choices available to consumers means that maintaining loyalty is more challenging. Establishments succeed by offering exceptional service and unique experiences to stand out in a competitive market.
To improve customer retention, hospitality businesses can consider prioritizing these factors:
- Enhanced digital engagement. Leverage technology to stay connected with your customers. Use mobile notifications or email newsletters to provide updates on special events, new menu items, and exclusive offers. Engage with customers by sharing behind-the-scenes content or hosting interactive sessions on social media.
- Community involvement. Become an active part of the local community by participating in or sponsoring events, collaborating with local businesses, or supporting local charities. Building a reputation as a community-oriented establishment can foster a sense of loyalty among local customers who appreciate businesses that give back.
- Unique dining experiences. Create distinctive dining experiences that go beyond just food and service by launching themed dining nights, live entertainment, chef’s table experiences, or interactive cooking classes. Offering something out of the ordinary can make your establishment a destination and encourage repeat visits.
Ecommerce: 30%
Decile, a customer data and analytics solution, revealed in its 2023 Ecommerce Benchmarking Guide that the average retention rate for all the brands on its platform was 30%. This figure may seem dismal compared to other sectors, but it reflects the unique challenges and opportunities within the digital marketplace. High competition, the ease of switching between stores, and the constant hunt for better deals can make customer retention tricky.
That said, you certainly shouldn’t see 30% as the limit. Mark Ainsworth, digital PR and marketing director for digital marketing agency Max Web Solutions, says the average CRR for their clients is 62%. “This is largely because of our focus on personalized customer experiences and robust after-sales support, which encourages repeat business and fosters long-term loyalty,” explains Mark.
Here are some ecommerce retention strategies that will help you get your CRR to where you want it to be:
- Optimize your online presence. Easy navigation, fast site speed, and a simple checkout process are crucial elements that can make or break a sale. Shopify offers tools to streamline site performance, enhance mobile optimization, and simplify the checkout process.
- Stay top of mind. Email marketing, retargeting ads, and a solid social content calendar will keep your brand in customers’ purview. Shopify’s marketing tools and integrations make it easy to set up and manage these campaigns, helping you maintain a presence in your customers’ minds.
- Keep customers happy. A tedious return process or poor ecommerce customer service can make or break the customer experience. Shopify can help with tools like returns management apps, customer service integrations, and social media engagement features, ensuring a seamless and satisfying experience that keeps customers coming back.
10 factors influencing customer retention rates
- Trust
- Customer service
- Customer lifetime value
- Community
- Expert support
- Values
- Convenience
- Price
- Perks
- Quality
A satisfied customer will return to an establishment to make more purchases, raising the customer retention rate. While customer satisfaction is a key factor affecting customer retention rates, it’s not the only one.
These 10 factors help determine a business’s customer retention rate:
1. Trust
Customers return to businesses that they trust and that provide a certain amount of transparency. Indeed, a 2020 study found that, by demonstrating a commitment to social responsibility, financial service companies could increase trust by 12%.
It’s easier to cultivate brand loyalty when customers know they can easily return items and won’t be slapped with hidden fees or experience other unwelcome business practices. Whether it’s an insurance company or another type of service provider, customers are more likely to be loyal to a brand if they are confident the company will be accountable should something go wrong.
2. Customer service
Customer-centric employees and attentive service also attract repeat customers. Whether it’s a fancy online shoe boutique or a chaotic grocery store, customers notice kind, polite, individualized customer assistance. According to a Gartner report, when customers feel they’ve received value from a customer service interaction, there is an 82% probability of repurchasing or renewal, and a 97% probability of positive word of mouth.
3. Customer lifetime value
When customers peruse an ecommerce platform, app, or brick-and-mortar shop and feel like the product selection and marketing visuals speak to them, they’ll likely return. Repeat customers have a higher customer lifetime value (CLV), which assesses the total amount a customer spends over the course of their relationship with the business. More specialized services or products tend to have fewer customers, but those customers tend to be loyal because they feel valued by the businesses.
4. Community
Customers often return to businesses when they feel a sense of community with fellow customers, the brand, and the employees. The Local, a small news platform in Europe catering to foreigners, has reduced its churn rate to less than 4%—nearly unheard of in the media industry—by actively engaging with readers and analyzing data to see what keeps them subscribing. You can start building community by reaching out and collaborating with your most loyal followers.
5. Expert support
When a customer shops and they feel the products or a particular service will help them reach their goals and achieve success, they come back. If someone is actively making DIY home improvements, for example, they will be more receptive to a housewares store that offers expert support and storage solutions. Effective customer service training involves making all of your employees experts in your business.
6. Values
Customer loyalty can blossom when brand values align with customers’ beliefs. For example, customers may want to know if a business is paying its employees a living wage and treating them fairly, or that the business is a certified B Corp.
7. Convenience
Some customers prioritize convenience above all else—if a store is on their way to work or a product will arrive more quickly than a competitor’s, that often may trump other factors such as values or community. To appeal to those in your ZIP code, consider location-based marketing and make sure to have an updated Google Profile. You can also offer contactless or digital payment options, as well as buy online, pickup in-store (BOPIS). Adjusting your hours so that it opens an hour before or one to two after a regular workday can make all the difference.
8. Price
For the average consumer, lower prices often attract repeat customers—who doesn’t like to pay less? Having periodic sales or offering incentives like a percentage off for a first purchase can attract new customers who then transition into repeat customers that will appreciate a new level of loyalty in the form of perks.
9. Perks
Sometimes it’s the little things: specials, samples, and freebies that create loyal customers. Discounts—as well as incentives, sales, free delivery, and loyalty programs—often make retained customers feel appreciated and are helpful strategies when acquiring customers just walking in the physical or virtual door.
10. Quality
The quality of products or services is a fundamental factor in customer retention. When customers perceive that they are getting high-quality products or services, they are more likely to return. Quality not only meets but exceeds customer expectations, ensuring satisfaction and loyalty. Investing in both your product and the marketing/publicity for your product is the only way to find success with this strategy. Beyond product development, make sure you have a strong influencer marketing program.
Strategies to improve customer retention rates
If your business’s customer retention rate isn’t up to the industry average and you’ve already tried several customer retention strategies, here are a few more ideas that can help, regardless of the industry you’re in:
- Invest in retention software. Tools like Zendesk and Gainsight can help you retain existing customers by streamlining customer service and tracking engagement. These platforms offer comprehensive solutions to address customer concerns quickly and efficiently.
- Engage with fellow entrepreneurs. Sometimes, the best insights come from those who have faced similar challenges. Join online forums like the Shopify Community or local business groups such as your local Chamber of Commerce to discuss actionable insights with business owners like yourself.
- Implement new marketing strategies. Both physical and virtual businesses can benefit from a refreshed marketing strategy that implements email campaigns, customer feedback tools, and loyalty programs. These strategies can better engage customers and encourage repeat business.
- Leverage Shopify tools. Shopify’s robust set of tools makes it easier to keep your customers coming back. For example, you can run reengagement automations that send targeted email marketing campaigns.
By focusing on these strategies and building a solid customer retention program, you can improve your CRR, ensuring that your business exceeds customer expectations, fosters loyalty, and achieves long-term success.
Average customer retention rate FAQ
What is customer retention?
Customer retention is the percentage of returning customers to a business measured over a particular time—weeks, months, quarters, or years.
What is a realistic retention rate?
A realistic customer retention rate depends on your industry. Comparing your retention rate averages to previous periods can show if your retention strategies are attracting current customers to make more purchases or not.
What is a KPI (key performance indicator) for customer retention?
There are several KPIs for customer retention, including repeat purchase rate, which is when a customer transitions from buying the same product once a month, for example, to three times a month. Another KPI is analyzing simple customer satisfaction scores that potentially improve over time. A painful (yet informative) KPI is a business’s customer churn rate, which is the rate current customers stop purchasing goods or services.
How does customer retention rate impact a company’s profitability?
Retaining existing customers is generally more cost-effective than acquiring new ones because the cost of marketing and onboarding new customers is often higher. Loyal customers tend to make repeat purchases and spend more over time, and are more likely to refer new customers through word of mouth. This increases customer lifetime value and reduces costs associated with customer acquisition. High retention rates also lead to more stable and predictable revenue streams, enhancing overall profitability.
How does customer retention correlate with customer loyalty?
Retention measures the rate at which customers continue to do business with a company over a specific period, while loyalty is about the emotional attachment and commitment customers feel toward a brand. High retention rates often indicate strong customer loyalty, as loyal customers are more likely to continue purchasing from the same company. Loyalty drives retention by fostering repeat business, higher lifetime value, and positive word-of-mouth referrals, which all contribute to sustained customer relationships.
Read more
- Guide: How To Get a Good Customer Retention Rate
- 8 Ways Shopify Capital Can Help Grow Your Small Business
- 5 Ways to Improve Customer Retention for Ecommerce
- A Guide to Customer Retention Rate vs. Churn Rate
- Ecommerce Churn Rate: How To Calculate and Reduce Churn
- A Guide to Customer Retention Statistics for Business Owners
- What Are Chatbots? How To Add Chatbots to Your Shopify Store
Average customer retention rate FAQ
What is customer retention?
Customer retention is the percentage of returning customers to a business measured over a particular time—weeks, months, quarters, or years.
What is a realistic retention rate?
A realistic customer retention rate depends on your industry. Comparing your retention rate averages to previous periods can show if your retention strategies are attracting current customers to make more purchases or not.
What is a KPI (key performance indicator) for customer retention?
There are several KPIs for customer retention, including repeat purchase rate, which is when a customer transitions from buying the same product once a month, for example, to three times a month. Another KPI is analyzing simple customer satisfaction scores that potentially improve over time. A painful (yet informative) KPI is a business’s customer churn rate, which is the rate current customers stop purchasing goods or services.
How does customer retention rate impact a company’s profitability?
Retaining existing customers is generally more cost-effective than acquiring new ones because the cost of marketing and onboarding new customers is often higher. Loyal customers tend to make repeat purchases and spend more over time, and are more likely to refer new customers through word of mouth. This increases customer lifetime value and reduces costs associated with customer acquisition. High retention rates also lead to more stable and predictable revenue streams, enhancing overall profitability.
How does customer retention correlate with customer loyalty?
Retention measures the rate at which customers continue to do business with a company over a specific period, while loyalty is about the emotional attachment and commitment customers feel toward a brand. High retention rates often indicate strong customer loyalty, as loyal customers are more likely to continue purchasing from the same company. Loyalty drives retention by fostering repeat business, higher lifetime value, and positive word-of-mouth referrals, which all contribute to sustained customer relationships.
