Why Customer Retention is So Important for ROI, Customer Loyalty, and Growth

By
Arron Westbrook
Last Updated: November 10, 2025
Reading time: 7 minutes

Hundreds of rave reviews on both Yelp and Google, 3 million visitors, an appearance on The Ellen Degeneres Show, and a video segment of their shop with over 6 million views – all for a $1 pizza slice shop called, Rosa’s Pizza Shop.

For Rosa’s, strong customer retention and national recognition was the outcome of customer loyalty and a strong devotion to the community and their customers.

You don’t need an appearance on a talk show, a viral video, or newspapers talking about you to grow your business and keep your customers. But, it’s that kind of loyalty that can get your business through a pandemic, and then some.

Below, we share how customer retention efforts get you through the toughest situations, including the current cost of living crisis, and how to improve your customer retention.

Customer retention is key to surviving the cost of living crisis

If you haven’t felt the impact of the recent inflation spikes, you must be living in 2019. Customers across the western world are feeling the sting of inflation, hovering at 9% for the western world, though it’s rumoured it may spike to as high as 18% in some countries.

And though things might level out as the year progresses, there’ll be a knock-on effect for years to come.

The cost of everything, from gas and food to consumer products and housing, is so high that consumers can’t keep up. They’re cutting any unnecessary spending, culling subscriptions, and tightening their purse strings.

‍ Read our eBook on how to Navigate Through the Cost of Living Crisis

Some businesses have experienced revenue growth since 2020, by an average of 87%, but profits for those businesses are still down by 4% in comparison to pre-pandemic years.

The only thing you can do to counteract the weight on your business, and experience growth, while maintaining profitability is to focus on understanding your customers (deeply).

Customer retention rate by industry

The average customer retention rate across all industries is 75.5%. This is rather good news for most businesses since you’re 60-70% more likely to sell to existing customers than you are to new ones.

While that’s the average, customer retention rates across each industry vary wildly, and in turn, the strategies each industry must use to combat churn vary with it.

Compare fashion and fintech, as an example.

The customer retention rate for the fashion and retail industries hovers around 63%, while the retention rate for fintech sits at only 16%, with around 73% of customers churning in 7 days.

Now consider eCommerce.

During the GetUplift Online Summit, Valentin Radu, the Founder, and CEO of Omniconvert, stated in a presentation that the average customer retention rate for the eCommerce industry is 30%.

If your year-over-year (YoY) customer acquisition is 50%, the lifetime value of those customers, even with an average order value of $8, can be quite high.

Customer Retention Management: How to Improve Customer Retention Rates

Customer retention may look different for every company, but what remains steady is the dependence on every touchpoint that your customers encounter, particularly customer support.

Ask for feedback and act on this information

Support knows more about your customers than arguably any other department. They're the best resource to tap when you're trying to learn more about your customers, why they buy, and what you can do to make them stay.

By fixing issues found in feedback, you should naturally improve retention rates.

Give the right insights to the right people, at the right time

For instance, one customer might turn to your competitors after a series of issues that they've tolerated for several months and are finally fed up with. Another customer might churn because of one single issue with your site.

While it's challenging to acquire customers, and often takes a long time to build up customer loyalty, it's relatively easy to lose them.

Unify and analyse your customer data

Companies have access to more than 9,000 tools for customer insights and data collection, and these tools can generally collect millions of data points across buyer segments. Yet, most teams don’t have the visibility they need into this data.

Unifying the data under a single platform, setting parameters for analysis, and selecting personalised dashboards to monitor, gives your team a clean and organised picture of your customers, so you can apply that data to optimisation efforts.

Create a consistent customer experience

If the experience is great on the CX side, but shipping and support are a mess, they’re unlikely to stick around, let alone feel loyal to your brand.

A consistent and unified customer experience creates benefits internally:

• Maintains brand consistency
• Tears down silos between teams

Build a customer loyalty program

Loyalty programs can look different for every business, and have about a million different ways of engaging and appealing to customers.

Other brands, like Uber, have rewards based on points.

Empower your teams with the right technology

The right technology makes it easy for them to enrich and analyse that data, share with team members and other departments, and ultimately act on the feedback.

Improve your customer retention with Unified Customer Intelligence

Only 10% of CX employees have a unified view of their customer data. Unifying your data into a single view, with common taxonomies, and filtering for the insights that matter the most to your team allows you to make decisions about your products and services holistically.

Customer Retention: FAQs

What is customer retention?

Customer retention is the ability of a business to keep existing customers engaged and loyal over time.

Why is customer retention important?

Retention is cost-effective compared to acquisition. Loyal customers spend more, buy more frequently, and are more likely to recommend a brand.

How is customer retention measured?

Retention is measured using metrics like retention rate, churn rate, repeat purchase rate, customer lifetime value (CLV), and Net Promoter Score (NPS).

What factors influence customer retention?

Key factors include product or service quality, customer support, pricing, personalization, and overall customer experience.