30+ Invaluable Customer Loyalty Statistics [2023]: What Makes Customers Come Back?

Research Summary. In many ways, customer loyalty is the key to a successful business. When customers trust your brand, not only are they more likely to come back again and again, but they’ll also tell others about their positive experiences. With that in mind, we’ve done our research to find out just how important customer loyalty really is:

• 65% of the average company’s business comes from existing customers.

• 75% of consumers prefer companies that offer rewards.

• Increasing customer retention by just 5% can increase profits by 25%-95%.

• 43% of consumers spend more money at businesses they’re loyal to.

• 90% of businesses have some form of a loyalty program.

• 57% of Gen Z Americans have less customer loyalty than they did prior to the COVID-19 Pandemic.

For further analysis, we broke down the data in the following ways:
Benefits | Opinions | Loyalty Programs | Customer Loss | Consumer Behavior | Customer Spending

Customer Loyalty Statistics by Company Benefits

There are many benefits that come with loyal customers. From better profits to gaining a wider customer base, here are some crucial facts about the benefits of customer loyalty:

• 70% of companies agree that retention is cheaper than acquisition.

  In fact, an increase in customer retention has the ability to lower company costs by as much as 10%. Overall, companies that retain customers gain higher profits and need to dedicate less money to advertising.

• The probability of selling to an existing customer is up to 13X greater than it is for selling to a new customer.

  Overall, the probability of selling to a returning customer is between 60-70%, compared to only 5-20% for a new customer. That difference can have a massive impact on the number of sales a company makes.

• Highly engaged customers will make a purchase 90% more often.

  And that’s not all, as that 90% increase also comes with more money spent. On average, highly engaged customers spend 60% more per transaction. That means that if a new customer spends an average of $20 per purchase, a highly engaged customer would spend an average of $32.

• 76% of businesses believe tracking customer lifetime value is important.

  However, only 42% of companies are actually able to accurately measure CLV. This is despite the fact that 89% agree that CLV and a great customer experience are crucial for driving brand loyalty.

Customer Loyalty Statistics by Consumer Opinions

To improve customer loyalty, it’s important to understand what causes customers to be loyal. Luckily, consumers are very open about their preferences. Here are the facts:

• 56% of customers will stay loyal to a brand that “gets them.”

• 97% of American consumers are loyal to at least one brand.

• Unfortunately, 96% of consumers agree that loyalty programs can be improved.

• 75% of consumers would switch brands for a better loyalty program.

• 86% of loyal consumers will recommend a company to friends and family.

• A staggering 92% of consumers trust family and friends more than online reviews.

• At least 40% of consumers say quality products make them loyal.

Customer Loyalty Statistics by Customer Loyalty Programs

Loyalty programs are one of the primary ways companies retain customers. However, not all programs are created equal. To find out just how much these programs affect consumers, here are some interesting facts about them:

• The average consumer is enrolled in 14.8 loyalty programs.

  However, that same consumer is only active in an average of 6.7 loyalty programs, meaning that only around half of the programs are successful in maintaining loyalty.

  

• Customers in loyalty programs increase their spending by 20%.

  The fact is that in the long term, rewards can have a considerable impact on consumer spending behavior. Overall, customers who save up for bigger rewards typically spend the most.

• 83% of customers are more likely to continue doing business with a brand that has a loyalty program.

  Customers are far more likely to return when they feel as though there’s a benefit to doing so. For instance, because 57.4% of consumers want to save money when loyal to a brand, rewards make them more likely to return.

  After all, if you get free items or a percentage off of a product when shopping at the same store, as opposed to a new store, it puts an incentive to return.

• 50% of consumers said that the primary reason they join loyalty programs is to earn rewards on everyday purchases.

  These rewards lead to discounts, which are very valuable for consumers. That’s why half of all American consumers consider rewards a crucial part of brand loyalty.

• 85% of Millennials believed that loyalty programs enhance their experience with a brand.

  That’s more than any other generation, but all generations do feel similarly. For instance, 84% of Gen X and 80% of baby boomers also agree that loyalty programs enhance their experience with a brand.

  

• 58.7% of internet users believe earning rewards and loyalty points is a valuable part of the shopping experience.

  E-commerce has become a huge part of the American consumer’s daily life. For instance, e-commerce sales accounted for over 14.6% of all U.S. retail sales in 2022. That means creating loyalty programs that cater to the interests of this demographic will become increasingly important.

Customer Loyalty Statistics by Loss of Customers

Unfortunately, bad loyalty programs, or companies that don’t put emphasis on loyalty at all, can experience many negative consequences. To understand just how much poor loyalty practices can impact a business, here are some interesting facts about just that:

• 74% of loyal customers will switch brands if you don’t satisfy them.

• 80% of customers will likely switch brands after just one bad experience.

• 61% of retail companies cite retention as their biggest challenge.

• 73% of customers will stop doing business with a brand after three or fewer bad customer service experiences.

• The average company loses 23%-30% of customers each year to a lack of loyalty.

Customer Loyalty Statistics by Consumer Behavior

There are many ways that loyalty can affect consumer behavior, even if customers aren’t aware of it. From buying more to making recommendations, our research shows that:

• 60% of loyal customers will buy more frequently.

  Brand loyalty, which is reinforced by positive experiences, creates loyal customers that will buy more frequently. This is especially true around the holiday season, when businesses typically receive the most traffic. Loyal customers will trust a brand enough to consistently buy holiday gifts year after year.

• 20-30% of customers will make a repeat purchase.

  This stat highlights why loyalty programs and other incentives are so important. If loyal customers drive business, it’s extremely beneficial to try and increase that 25% average to a 50% average.

• 82% of customers with a high emotional engagement towards a brand will always buy from it.

  High emotional engagement is crucial for customer loyalty. To understand just how important, consider the fact that these customers have a 306% higher lifetime value and will likely recommend the brand to others.

• 77% of customers will recommend a brand after one positive experience.

  Satisfied customers are like walking advertisements, even after only one purchase. Further, a whopping 94% of Americans will recommend a business whose service they consider “very good.”

Customer Loyalty Statistics by Loyal Customer Spending

It’s no secret that loyal customers spend more, but just how much more do they spend? To find out and analyze how this increased spending affects businesses, we’ve gathered the following statistics:

• On average, 80% of profits come from 20% of customers.

  Known as the 80/20 rule, a base of 20% loyal customers will deliver more value than the other 80% of customers combined. For example, if a company makes $100,000 per year and has 1,500 customers, that means that $80,000 of revenue would have come from only 300 of the most loyal customers.

• Loyal customers spend 67% more than new customers.

  To put that into perspective, imagine that most new customers spend an average of $50 when purchasing from a particular brand. That would mean that a loyal customer purchases an average of $83.5 per purchase instead.

• Customers with an emotional relationship with a brand have a 306% higher lifetime value.

  Customer lifetime value (CLV) is the culmination of total worth to a business over the entire period a customer interacts with them. CLV is important because it indicates how much income companies receive from loyal customers, and the fact is that customers with a high emotional engagement are 3X more likely to have a higher CLV.

Customer Loyalty Statistics FAQ

1. What is customer loyalty?

   Customer loyalty is an ongoing emotional relationship between a customer and business, which typically results in several benefits.

   Some of the most common benefits include higher engagement, larger and more frequent purchases, and consistent positive recommendations. Overall, loyal customers are extremely valuable because they can contribute to a majority of a company’s profits, as well as operate as a walking advertisement.

2. How do you calculate customer loyalty?

   There are five crucial metrics than can help calculate customer loyalty. Not only do these metrics help calculate customer loyalty, but they can also help you determine the overall health of your business. They include:

   • Net Promoter Score (NPS). This is a simple tool that helps gauge customer satisfaction. Typically, the customer is asked to score the business on a scale of one to ten. However, customers are only considered “promoters” when they score nine to ten on the scale.

   • Repeat Purchase Rate (RPR). RPR is the percentage of customers who’ve returned multiple purchases. To find RPR, you simply divide the number of repeat customers by the total number of customers to find a percentage.

   • Customer Lifetime Value (CLV). Among other benefits, CLV will also inform you of the profit margin you can expect to earn over the course of your relationship with a customer.

     CLV can be calculated by multiplying the average value of a sale, the average number of transactions, and the average retention period to find lifetime value, then multiplying that number by your profit margin.

   • Customer Loyalty Index (CLI). CLI is a tool for tracking customer loyalty over time and typically involves three questions:

     • How likely are you to recommend X to a friend/family member?

     • How likely are you to buy from X again?

     • How likely are you to try other products or services offered by X?

     These questions are then answered on a scale of one through six, one meaning “very likely” and six meaning“not likely.”

   • Customer Engagement Score (CES). As the name would suggest, CES helps businesses determine how engaged their customers are. To calculate it, inputs like activity time, frequency of usage, level of usage, number of actions taken, and key performance indicators are all assigned on a scale of one to ten.

3. How effective are customer loyalty programs?

   Around 69% of customer loyalty programs are effective in influencing customer decisions. In fact, loyalty programs can often make or break customer loyalty as a whole, with good programs generating larger purchases and bad programs driving customers to other brands.

   For example, 83% of customers are more likely to continue doing business with a brand that has a loyalty program, while 75% of consumers will also switch brands for a better loyalty program.

4. What are some different types of loyalty programs?

   There are at least five common types of loyalty programs, as well as hybrid programs.

   These include:

   • Point Programs. By far the most common type of program, point programs allows customers to earn points as they spend money. In turn, these points can be used for rewards, typically based on how many are earned.

   • Spend-Based Programs. This program offers consumers credits based on the amount they spend. While simple, it’s been proven to increase transaction amounts and reduce churn rates.

   • Tiered Programs. Tiered programs encourage higher levels of loyalty by giving customers more rewards as they earn higher tiers. The result is more purchases and highly loyal customers.

   • Paid Programs. Otherwise known as VIP programs, these exclusive perks require an annual or monthly fee to access. The more exclusive access the program provides, the more successful it will be.

   • Value-based Programs. Value-based programs allow customers to identify with your brand, especially morally. As an example, imagine a program for military backpacks that donates part of your purchase to U.S. veterans.

5. What are the metrics of customer loyalty and retention?

   There are many metrics of customer loyalty and retention. Overall, some of the most common include:

   • Churn rates

   • Customer experience

   • Emotional engagement

   • Customer retention rate

   • Existing customer revenue growth rate

   • Net incremental revenue

   • Repeat purchase ratio

   • Daily, weekly, and monthly active users

   • Customer lifetime value

   • Product return rate

   • Net promoter score

   • Loyal customer rate

6. What increases customer loyalty?

   There are five major strategies that increase customer loyalty. For example:

   • Prioritizing Customer Service. 73% of customers will stop doing business with a brand after three or fewer bad customer service experiences, which highlights just how important it is to have good customer service.

     Overall, good customer service not only helps businesses retain customers but also makes those customers more likely to leave positive reviews.

   • Reward Loyal Customers. Implement loyalty programs and other rewards for customers who return again and again. That way, these customers will have more of an incentive to come back.

   • Take Constructive Criticism. Negative reviews and criticism can be a real bummer, but they can also be a great learning experience. When companies listen to customer opinions, they can more efficiently improve their products and services. In turn, that process will give customers higher emotional engagement and make them more loyal.

   • Make it Convenient. If you can find ways to make your customers’ lives easier (i.e., streamlined websites, free shipping, delivery, etc.) Customers will be happier with their experience and more likely to return.

   • Grow Your Engagement. Engagement is a huge part of loyalty, and businesses that make an effort to connect with their customers will receive far more of it. Make social media posts, respond to customer reviews, and overall do your best to encourage lines of communication.

Conclusion

When the probability of selling to an existing customer is up to 13X greater than it is for selling to a new customer, it’s clear that customer loyalty matters. In fact, as much as 80% of a company’s sales can come from just 20% of the most loyal customers.

Overall, implementing strategies and infrastructures that encourage customer loyalty is incredibly cost-effective. For minimal expenses, loyalty programs and other tools can serve to generate more frequent purchases, more recommendations, better reviews, and larger sales. With that in mind, there’s really no downside to improving customer loyalty.

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Author

Jack Flynn

Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.