What is customer retention? Metrics, benchmarks, and strategies

A customer runs into an issue and reaches out for support. The experience is fast, clear, and consistent—so they stay. If it’s slow or inconsistent, they start looking elsewhere. In fact, according to the Zendesk CX Trends report, 85% of CX leaders say customers will leave after a single unresolved issue.

Businesses invest heavily in marketing, social media, and sales strategies to win new customers. But without a strong customer retention strategy, that investment is lost. A good retention strategy is driven by quality customer-facing interactions and an outstanding customer experience that strengthens trust over time.

Customers don’t stay because of one great moment—they stay because every interaction meets expectations. Consistent service, fast resolutions, and reliable support shape whether customers decide to return or leave. The metrics, strategies, and examples below show how to turn those interactions into long-term retention.

More in this guide:

• Key benefits of customer retention
• Key customer retention metrics to measure (+ formulas)
• 8 strategies to retain customers
• 6 customer retention examples and why they work
• Benchmarks by industry and model
• Frequently asked questions
• Boost your customer retention with Zendesk

Key benefits of customer retention

Customer retention directly impacts revenue, efficiency, and long-term growth. When customers stay, they spend more, require less acquisition effort, and build stronger relationships with your brand. It also signals that your product and service consistently meet expectations—something supported by broader customer experience statistics.

Here’s how customer retention delivers measurable advantages across industries. 

Reduced customer acquisition costs (CAC)

Customer retention reduces the need to constantly acquire new customers. When customers return and spend more over time, they offset acquisition costs and improve overall efficiency.

Increased revenue from existing customers

Existing customers are more likely to buy again, upgrade, or expand their relationship with your business. Trust built through consistent experiences reduces friction and increases conversion rates compared to new prospects.

Customers become loyal advocates

Customers who consistently receive reliable service are less likely to switch to competitors. Over time, they promote your brand through reviews and recommendations, driving new business without additional acquisition spend. These behaviors are strong indicators of customer loyalty.

Key customer retention metrics to measure (+ formulas)

Customer retention metrics show where you’re keeping customers—and where you’re losing them. The most important include customer retention rate, churn rate, customer lifetime value, repeat purchase rate, and purchase frequency. These metrics are often tracked and optimized by a customer experience manager to improve overall performance.

Each metric highlights a different signal, from overall stability to churn risk and long-term customer value. Use the formulas below to calculate and track retention performance over time.

Customer retention rate

Perhaps the most obvious way to measure customer retention is with customer retention rate. This metric shows the percentage of customers who remain loyal to your business over a specific period of time.

First, you'll need to identify the time period you want to measure—whether that be a month, a quarter, or a year. Next, identify the number of customers at the start of the period, the customers who you gained during the period, and the customers at the end of the period. Put it all together, and you get the following formula:

Customer churn rate

A less direct indicator of customer retention is your churn rate—the percentage of customers lost during a period of time. Companies that struggle with customer service retention usually have a high churn rate.

Low retention rates or high churn rates could be bad signs, indicating that something about your customer experience isn't going well. But don't panic—there are several changes you can make to turn the churn around.

Customer lifetime value

Customer lifetime value measures the total revenue you can expect from a customer during their lifetime and helps a business discover its most loyal customers. The longer a customer remains loyal to a company, the higher their lifetime value becomes.

For example, a customer who signs up with a 50 percent discount and then closes their account would have a low lifetime value. Businesses will want to find what customer groups have the highest lifetime value to maximize profits and discern mutual opportunities.

Repeat customer rate

The repeat customer rate accounts for all customers who have made two or more purchases. This is a popular customer retention metric among e-commerce businesses that can be applied to other business models.

Purchase frequency rate

Purchase frequency rate shows how much repeat business you get over a given amount of time. The time period can range anywhere from a week to several years. However, it's generally a best practice to calculate this annually to get a clear view of fluctuations and the role that certain factors—such as seasonality—play in this information.

8 strategies to retain customers

Improving customer retention depends on delivering fast, consistent, and reliable customer experiences. Many teams now rely on AI customer experience tools to scale support and maintain quality across every interaction.

To improve retention, focus on these eight strategies:

• Offer omnichannel support
• Respond to customer queries quickly
• Personalize support interactions
• Incentivize customer loyalty
• Launch referral programs
• Improve employee experience
• Gather customer feedback
• Build a customer community

Each strategy targets a specific point in the customer journey, helping you reduce churn and build long-term relationships.

1. Offer omnichannel support to reach customers where they are

Omnichannel support—and, by extension, omnichannel customer service—is an excellent tool for customer retention. It allows agents to access contextual information about clients across various platforms to curate highly personalized experiences.

Aside from the ability to execute conversational sales and support strategies, it also creates a better CX for clientele. When businesses offer omnichannel support, customers can chat with a person on the platform of their choice and receive faster resolutions.

2. Respond to customer support queries quickly

Quick first replies can result in higher customer satisfaction. Even if you can't solve the ticket immediately, it still pays to respond to the customer ASAP.

A quick reply can be a short message letting the customer know you received their question. Or, better yet, provide an estimate for how long it will take to solve their problem. Customers are more willing to wait if they know you're actively working towards a solution; setting time frame expectations upfront helps.

3. Personalize support interactions

Customers feel frustrated when they have to explain an issue over and over; and exhausting, repetitive interactions make customers more likely to leave.

Equip agents with customer service software that has the capabilities they need to easily pull customer information, view the conversation history, and streamline conversations. The Zendesk Agent Workspace, for example, offers agents customer context in order for them to deliver a personalized experience.

4. Incentivize loyalty

Increase customer retention by rewarding customers who are loyal to your company. By showing customers you appreciate their business, you give them another reason to stick around.

To buy your business some customer goodwill, consider offering:

• Loyalty programs
• Discount codes
• Special offers
• VIP events
• Early-access benefits

There are several types of loyalty programs, from points-based systems to tiered rewards. These incentives help collect detailed customer data which allows your business to offer more personalized experiences and messaging.

5. Offer a referral program

Referral programs serve the dual purpose of boosting customer retention and aiding acquisition efforts. This word-of-mouth marketing strategy is effective because it brings in new prospects who already have faith in your business based on the recommendations of someone they trust.

It also fosters goodwill with existing customers who receive additional benefits for shopping with you and advocating for your brand. Some popular incentives include:

• Cash
• Free merch or products
• Store credit

Offering these incentives will benefit your company because it encourages customers to keep coming back, and the social proof loyal customers provide will also give your business a competitive edge.

6. Create a positive experience for employees

Happy employees are generally more inclined to provide top-of-the-line support and form long-lasting relationships with clientele that improve customer retention. Incentivizing staff to create connections can go a long way in building trust, making it easier to keep customers loyal to you, even if issues arise.

Creating a positive work environment also helps reduce turnover rates and improve the employee experience. This is great for businesses because the longer your staff sticks around, the more knowledgeable and tuned in to customer issues they'll be.

7. Gather customer feedback often

Customer feedback is one of the most valuable tools to increase customer retention and reduce churn rates. If you want to know what is and isn't working for your customers, it helps to hear it straight from the horse's mouth.

Give customers a voice by conducting surveys. Customer satisfaction surveys can be as simple as asking for a “thumbs up or thumbs down” after resolving a ticket, but it's especially useful to ask more specific questions, such as:

• How would you describe your experience with our product?
• What isn't working for you and why?
• Which of the following channels do you prefer using for customer support?

Additionally, supplement your surveys with feedback from customer service team members. They're closest to customers and can identify common complaints and general preferences.

8. Build a strong customer community

Create an online community for loyal customers to interact with each other and share their experiences. This can serve as an educational forum for customers to learn more about your products and gives you a direct line to their thoughts and problems. Interacting with customers in online spaces like these allows you to address concerns early and keep buyers engaged long-term.

6 customer retention examples and why they work

Customer retention is the key to success. But don't just take our word for it. Here are a few real-life ways well-known businesses are making retention a priority.

1. Offer a seamless online experience

One of the most basic examples of a customer retention strategy is meeting customer expectations. Customers today expect online experiences that are on par with, or better than, in-person experiences. In fact, according to Zendesk Benchmark data, 65 percent of customers want to buy from companies that offer quick and easy online transactions.

Amazon is one of the standouts for delivering that experience as they offer simplified transactions, free two-day shipping with a Prime membership, and an easy-to-use UX.

2. Make every customer feel like a VIP

Luxury hotels are renowned for high-quality, exclusive customer service. The Four Seasons expands that feeling of luxury to every customer through a combination of technology and white-glove service.

Guests can use Four Seasons Chat to message staff through channels such as WhatsApp for inquiries or service requests, including restaurant recommendations and reservations, room service orders, arrival or early checkout, and even a private jet reservation.

3. Build empathetic customer relationships

One thing you should know about customer service skills is that empathy is key to building lasting customer relationships. During the COVID pandemic, Zappos started a hotline where customers could call or chat with a support team member about anything—even the hottest Netflix shows. This fostered genuine, personal interactions that showed Zappos cared about its customers and didn't treat them as another number.

4. Be proactive

Customers expect brands to anticipate their needs and get in front of issues before they even happen. That's why proactive service is so important in retaining customers. Dollar Shave Club welcomes website visitors with a chatbot to answer common questions before a customer reaches out to customer support or abandons their cart.

5. Support causes your customers care about

Customers are growing increasingly conscious, and many prioritize buying from socially responsible companies that prioritize diversity and inclusion in their workplaces. Knowing this, Bombas donates a clothing item to a homeless shelter or homelessness-related charity with every purchase.

6. Create a unified customer view

According to Zendesk Benchmark data, 73 percent of business leaders say there's a direct link between business performance and customer service. Enable agents to create richer, more personalized experiences for your customers by creating a single customer view. Polaris aims to retain valued customers by using powerful support software to achieve best-in-class support across several channels, increasing agent productivity by 30 to 40 percent.

Benchmarks by industry and model

There’s no single “good” customer retention rate. Benchmarks vary based on your business model, contract length, and how often customers interact with your product. Use these ranges as a baseline—not a target. To understand performance, compare retention across cohorts, segments, and customer lifecycles.

Broad benchmark ranges

A strong customer retention rate often falls between 85–90% or higher, depending on your business model. Short purchase cycles and low switching costs typically lower this range, while contracts and subscriptions push it higher.

High retention is achievable when service quality stays consistent at scale. For example, Grove, a sustainable consumer goods brand, maintains a 95% CSAT score with a smaller team using AI-assisted workflows. For this company, efficiency and consistency directly support retention.

Benchmarks provide a baseline, but they don’t guarantee performance. Even small gaps in service quality or resolution speed can quickly drive customers to leave.

Retail and ecommerce ranges

Customer retention rates in retail and ecommerce are typically lower, often falling between 50–70%. Short purchase cycles and low switching costs mean customers can leave after a single poor experience.

Without in-store support, digital experience quality becomes the primary driver of retention. Delivery, returns, and support responsiveness determine whether customers buy again or switch.

Strong retail teams measure retention through key service moments, not just repeat purchases. Track post-purchase contact rates, returns satisfaction, and how quickly delivery issues are resolved.

For example, Accent Group, a global retail brand, reduced wait times by 90% and improved customer satisfaction. This shows how faster, more reliable service drives repeat purchases.

Subscription retention targets

Customer retention rates for subscription businesses typically range from 75–90%. Renewal cycles and contracts create stronger incentives for customers to stay.

Retention depends on what happens before renewal, not just at the renewal point. Effective onboarding, ongoing education, and proactive support keep customers engaged and reduce churn risk. With this in mind, strong subscription teams focus on resolving issues early and maintaining consistent service quality. Faster resolutions and clear communication increase the likelihood of renewal.

For example, SeatGeek improved resolution speed and increased automated resolutions, which raised customer satisfaction. Higher satisfaction supports stronger renewal rates and long-term retention.

Segment-level variation

Customer retention is not uniform across your customer base. Aggregate retention rates often hide where churn is actually happening. Retention is most volatile early in the customer lifecycle and stabilizes over time, making gains harder at higher retention levels. Improving from 60% to 70% is easier than moving from 90% to 95%.

To identify risk, break retention down by segment. Compare new versus long-tenured customers, and separate champions from at-risk users. Teams that monitor trends and churn signals across segments can act earlier and prevent losses. Without this visibility, issues go unnoticed until customers leave.

Frequently asked questions

Boost your customer retention with Zendesk

Building your company's reputation and a loyal customer base doesn't happen overnight, but with dedication and the right CX partner, you'll be much closer to earning the trust of your customers.

Use Zendesk to connect with customers. With leading customer service features like AI agents, automated QA, and integrated support, you'll be even closer to cultivating a customer experience that people will rave about.

Learn how our customer service software can help you create meaningful connections with your customers.