Average Customer Retention Rate By Industry: What Is A Good CRR?

As you become involved in the e-commerce realm, you will undoubtedly realize the importance of customer retention. Sustaining the largest number of customers along their journey contributes to the success of your e-commerce. Not to mention that it generates more revenue.  

So, to measure the number of customers you were able to sustain, you have to calculate the customer retention rate. 

Customer retention rate (CRR) is the proportion of customers you were able to sustain over a certain period.

Table Of Contents:

1. How to Calculate Customer Retention Rate
2. What Is A Good Customer Retention Rate?
3. Average Customer Retention Rate By Industry
4. Customer Retention Rate In The Retail Industry
5. Average Customer Retention Rate In E-commerce

How to Calculate Customer Retention Rate

To calculate CRR, you have first to identify the period you aim to measure either monthly, quarterly, or annually. 

Then, gather three important numbers:

• The total number of customers you have at the end of a certain period
• The number of new customers you acquired 
• The number of previous or already existing customers you had at the beginning of a certain period

The formula is as follows:

• (Total customers - New customers) / Previous customers) x 100

Now that you have calculated your CRR, you are facing an obstacle which is knowing what is a good customer retention rate and what is its average. 

Yet, we have got you covered, in this article, we will provide you with a full guide on what is a good customer retention rate, the average rate in several industries specifically retail and e-commerce. 

So, sharpen your pencils! 

What Is A Good Customer Retention Rate?

Generally, as you get closer to 100%, your customer retention rate gets better. Yet, a 100% retention rate is too good to be true. 

According to Uservoice, a good customer retention rate falls between 35% to 84%. But, it’s inaccurate to generalize as a good CRR varies based on the industry, product offered, and competition.

For instance, Saas's business revolves around sustaining customers for the longest time possible. Therefore, a good CRR in this industry should be around 90% and can be as high as 97% (Userpilot,2023). 

Average Customer Retention Rate By Industry

Just like good CRR varies based on the industry, the average customer retention rate also differs based on the industry. Therefore, let’s break it down based on the different industries.  

   1- Subscription-Based Industry 

The subscription-based model relies on fees paid at regular intervals. According to Sprinklr (2023), this industry CRR is around 40% to 45%.  

In contrast, a study conducted in 2022 found that the average retention rate for the subscription-based industry is 33% (Recharge,2023).

This is indeed a relatively good average CRR. It’s evident that subscription-based industries have studied customer patterns and worked on enhancing their loyalty to their business. 

2- Saas Industry Average CRR

The Saas industry can be regarded as overachievers. Their average customer retention rate is unlike any other industry. 

According to Woopra, the industry average CRR falls between 92%-97%. Whenever a customer deals with a certain software provider, they are less likely to abandon them; especially if running the software for the first time requires high costs.  

3- Media Industry

Exploding Topics (2023) showcased the average customer retention rate for the media industry which is 84%. 

This high average rate is linked to the notion that media firms are usually directed toward large corporations and clients. Hence, there are high switching costs. Thus, it’s less likely for customers to abandon the media firm easily. 

4- Manufacturing Industry

Shopify (2022) argues that the average CRR for the manufacturing industry is 67%. It’s regarded as a relatively good average rate. Once customers have known a manufacturer and are on the same business path, they are less likely to abandon them. 

5-Average Customer Retention Rate For Other Industries

Other several industries can be considered when analyzing the average customer retention rate. This table is based on studies by Exploding Topics:

Customer Retention Rate In The Retail Industry

The average customer retention rate in the retail industry is around 63% (Userpilot,2023).

It’s regarded as a low rate compared to other industries. This can be linked to the plenty of options available and the high competition. In addition, the switching cost in the retail industry is low which means customers can abandon any brand in favor of another.

Average Customer Retention Rate In E-commerce

Sprinklr (2023) stipulated that the average customer retention rate in e-commerce is around 38%. This means that of 10 customers, only 3 remain with your brand for more than one year. 

Drip (2023) viewed the average customer retention rate for e-commerce as between 16% and 30%.

Likewise, Shopify (2022) mentioned that online retailers have an average CRR of 28.2%. Yet, they add that this rate differs based on the type of products sold. 

To elaborate, clothing products' average CRR is 26%, pet products is 31%, and cosmetics is 25.9% (Shopify,2022). 

Therefore, plenty of factors are considered when assessing the benchmarks for CRR retention rate in e-commerce. Hence, it’s necessary to consider additional metrics and KPIs alongside CRR to assess whether you are on the right track or not. 

For example, average order value, churn rate, and repeat purchase rate are all important metrics you should consider. 

Final Thoughts:

Customer retention rate is one of the most important indicators for the success of any business. It shows if customers tend to return to your business or abandon it for good. 

Pareto's principle wrapped up CRR by mentioning that 80% of your profit comes from 20% of your customers. Hence, instead of directing all of your marketing efforts toward attracting new customers, work on nurturing the present ones. 

Accordingly, you have to be constantly up to date with the average customer retention rate in your industry to know if you are on the right track or not. 

If your CRR doesn’t fit with the average rate in your industry, you have to embark on some strategies to sustain the largest number of customers for your business. 

As for the e-commerce business model, you can work on personalizing customer’s experience, offering relevant product recommendations and product ads, and relying on email marketing. 

All of this and more is available on Convertedin. It’s a marketing automation tool that will enable your e-commerce to nurture current customers and increase customer retention rates.