Average customer retention rate by industry: 7 top examples
There are two ways to analyze benchmark retention: against yourself and against other companies within your industry. Knowing what the average customer retention rates by industry are and what affects them is essential to tweaking your retention strategy.
Let's look at the top seven examples across different industries.
1. Retail: 63%
Compared to other top examples, the retention rate in the retail industry is fairly low. The reasons are high competition and lack of difficulty to leave.
Consumers in the retail industry are virtually bombarded by a variety of choices. Companies work hard to make the switch from one brand to another. Meanwhile, the number of leads in this industry is extremely high. For some companies, the difference in costs of acquisition and retention can be minimal.
2. Banking: 75%
An average American uses the same primary checking account for 16 years. The key reasons why consumers switch banks are usually tied to relocation or other life circumstances. Clients tend to stay with banks for decades. For example, in 2018, only 4% of consumers switched banks.
The reason is high customer satisfaction. Banks excel at customer satisfaction tactics. They make collaboration effortless and contribute to their clients' success.
3. Telecom: 78%
The high retention rate in the American telecom industry is attributed to the "difficulty to leave" factor. These companies focus on customer loyalty programs and expand reward possibilities. Meanwhile, they create long-term contracts, making it harder for consumers to look the other way.
In some sectors of the telecom industry, such as wireless carriers, the competition isn't too diverse. Each top company offers similar sets of services and benefits, making switching meaningless.
4. IT Services: 81%
The reason for high retention rates in the IT sector is that top companies focus on the client's success. IT services generally show results rather quickly. Failing to achieve the desired outcome for the client quickly leads to a high churn rate and a ruined reputation.
5. Insurance: 83%
The retention rate of insurance companies depends on many factors. A high rate isn't always an indicator of the company's health. It's important to look at the time people spend as clients with the company and the retention rate by the acquisition period.
Losing 17 out of 100 clients can be highly detrimental to an insurance company. Much more than, for let's say, a retailer.
Insurance companies work on increasing wallet share and upping the "difficulty to leave" factor to keep their clients.
6. Professional services: 84%
Companies that offer professional services focus on building close relationships with their clients. This keeps the retention rate at a high level. They emphasize the individuality of each customer, making offered services an integral part of their success.
With the right approach to personalization, these companies make their services an integral part of the consumer's routine.
7. Media: 84%
Similar to retail, media companies focus on large volumes of clients. Even though they may have a hard time personalizing their products, these companies have large marketing and retargeting budgets, keeping the retention rate at a high level.