What is a Good Customer Retention? (& How to Improve It)
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Customer retention is a critical business performance metric—tracked specifically for measuring retention strategies performance. It’s the percentage of customers a business retains compared to the total number it started with in a given period.
A good customer retention rate depends on your industry, but most businesses aim for 70–90%.
In this guide, we’ll unpack what qualifies as a “good” retention rate, explore benchmarks across industries, and show you proven strategies to improve it.
What is a Good Customer Retention?
A good customer retention rate generally falls between 70% and 90%, with the overall average across industries sitting at 75%. This means that a company keeps 7 to 9 out of every 10 customers over a given period.
That said, customer retention isn’t a one-size-fits-all metric. Different industries see different averages because of product type and customer behavior. In SaaS, product complexity and high cost can lead to high retention rates, while retail typically has lower retention because shoppers are less committed and more flexible in their choices.
Average Customer Retention Rate by Industry
The average customer retention rate across industries sits at 75%, but it varies widely depending on the sector:
- Media companies: 84%
- Professional services: 84%
- Automotive and transportation: 83%
- Insurance: 83%
- IT services: 81%
- Construction and engineering: 80%
- Financial services: 78%
- Telecom: 78%
- Health care: 77%
- IT & Software: 77%
- Banking: 75%
- Customer services: 67%
- Manufacturing: 67%
- Retail: 63%
- Hospitality: 55%
What Affects Customer Retention: 7 Factors
Here are seven key factors that directly affect customer retention:
Customer trust rate. It’s the percentage of customers who believe in brand authority. It matters because higher trust directly increases retention—customers are more likely to stay loyal when they believe they’re in safe hands.
Customer support service. Customers often judge brands based on how they’re treated during issues. Quick, empathetic, and effective support makes customers feel valued and reduces frustration that might push them to competitors.
Customer lifetime value (CLV). It’s the total revenue a business can expect from a single customer throughout the entire duration of their relationship. Higher CLV means customers see lasting value in your business.
Customer service training. Well-trained staff can resolve issues faster, personalize interactions, and create positive impressions. Poor training often results in inconsistent or unhelpful service, which drives customers away.
Pricing range. Price shapes how customers perceive value versus cost. Setting it too high makes price-sensitive customers switch to competitors. On the other hand, if prices are too low, it can raise doubts about product quality.
Discount programs. Discounts and rewards give customers extra motivation to keep coming back. These programs also make customers feel appreciated, increasing their emotional connection to the brand.
Product quality. Product quality is the foundation of retention. High-quality products solve real problems, meet expectations, and naturally keep customers returning, while low-quality ones guarantee churn.
How to Improve Customer Retention Rate?
Below are 4 strategies that can help:
Design Retention Strategies
The key idea is to plan for retention just as carefully as acquisition. Instead of leaving customer loyalty to chance, businesses should map out strategies that encourage repeat purchases. To do this, start by segmenting your customers based on behavior and purchase history, then create tailored offers or personalized communication for each group.
Focus on Customer Reviews
Customer reviews signal customer loyalty to the brand. To make the most of them, businesses should encourage happy customers to share their experiences, highlight positive reviews across marketing channels, and respond quickly to any negative feedback.
Set a Reasonable Price
Better start with a reasonable range—fair to the customer while still profitable for the business. When customers feel they’re paying a fair price, they’re more likely to renew, repurchase, and remain loyal over time.
Further Reading
Stay Ahead of CLV
Customer Lifetime Value (CLV) tells you how much a customer is worth over time, and focusing on it shifts the strategy from short-term gains to long-term growth.
To put this into practice, track CLV regularly and compare it to customer acquisition costs (CAC) to ensure profitability. Use insights from CLV/CAC ratio to identify your most valuable customers, then invest in personalized experiences, upsell opportunities, and loyalty rewards for this segment.
Further Reading
Final Thoughts
Understanding a good customer retention rate is the very first step of building a smart retention strategy. That said, CRR alone doesn’t help much due to its limitation on cost and profit insight. Pairing retention with CLV, CAC, and net profit helps you gauge a more complete retention growth—maximizing profit, reducing wasted spend, and building long-term customer loyalty.
Managing customer retention effectively requires a clear understanding of acquisition costs vs. customer lifetime value.This is where TrueProfit, the #1 net profit analytics platform for Shopify, comes in. It’s known for reflecting the complete view of store profitability performance through profit tracking—caculating profit by conducting all expense types from total sale.
It also tracks Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC) alongside net profit, giving an accurate view of customer profitability that helps business owners make smarter decisions.
Further Reading
What is a Good Customer Retention Rate FAQs
Is 90% customer retention rate good?
Yes, a 90% customer retention rate is excellent. It shows that most of your customers are coming back, which usually means strong loyalty, great customer experience, and a profitable business model.
Is an 80% retention rate good?
Yes, an 80% retention rate is very good in most industries, especially in subscription-based businesses. For eCommerce, it’s on the higher end, showing that your brand keeps customers engaged and loyal.
Is 25% a good retention rate?
In eCommerce, a 25% retention rate is fairly average. It’s not bad, but there’s room for improvement. Increasing retention even a little can have a big impact on profit, since returning customers often spend more over time.
What is the 80/20 rule in customer retention?
The 80/20 rule, also known as the Pareto Principle, means that 80% of your profits often come from 20% of your loyal customers. Focusing on retaining and nurturing that top 20% can greatly boost your long-term revenue.
Is retention 3% or 5%?
Retention isn’t fixed at 3% or 5%. Those numbers usually come up when talking about churn reduction, where even a small 3–5% improvement in retention can significantly grow profits. Actual retention rates vary widely depending on the industry.
Is retention always 5%?
No, retention is not always 5%. Retention rate is a percentage that reflects how many customers you keep over time. It can be much higher or lower depending on your business type and customer engagement.
Is 33% retention good?
A 33% retention rate is decent for eCommerce. It means one out of three customers returns, which is above average in many retail sectors. With strong retention strategies, you can aim to push this number higher.
Can you have a retention rate over 100?
Yes, in rare cases, retention can exceed 100% if your returning customers bring in additional users, such as through referrals or team-based subscriptions. This usually happens in SaaS or community-driven models, not traditional retail.
What is the average customer retention rate for Shopify stores?
The average returning customer rate on Shopify is approximately 27–30%—roughly one in three customers makes a repeat purchase.
Irene Le is the Content Manager at TrueProfit, specializing in crafting insightful, data-driven content to help eCommerce merchants scale profitably. With over 5 years of experience in content creation and growth strategy for the eCommerce industry, she is dedicated to producing high-value, actionable content that empowers merchants to make informed financial decisions.
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