Customer retention is a badge of pride for any good business, as an army of loyal customers can be the key to helping businesses scale.
However, some businesses have higher customer retention rates (CRR), while others see higher churn rates instead.
In general, CRR can vary by industry—what’s “normal” for one type of business will differ from another. To understand how effective your business is at retaining customers, it’s most helpful to look at benchmarks for your industry.
For companies whose business model relies on a subscription or membership model, keeping a close eye on customer retention rate becomes even more important.
Use this guide to get an overall picture of customer retention and loyalty for your industry, plus find insights on measuring and improving your customer retention rate for better financial planning.
The average customer retention rate of the 10 industries we reviewed is 75%. By industry, rates vary from a high of 84% in the media industry to a low of 55% in the hospitality industry.
These customer retention statistics show industry averages versus the overall average rate.
| Industry | Average CRR | CRR Compared to Overall Average |
| SaaS | 68% | -7% |
| Banking | 75% | Even |
| Commercial Insurance | 83% | +8% |
| Healthcare | 77% | +2% |
| Hospitality & Travel | 55% | -20% |
| IT Services | 81% | +6% |
| Manufacturing | 67% | -8% |
| Media & Entertainment | 84% | +9% |
| Professional Services | 84% | +9% |
| Telecom | 78% | +3% |
Sources: ChartMogul (2023), Statista (2018)
While comparing your business’s customer retention to your industry average is useful, it’s not the end-all-be-all when it comes to customer loyalty metrics.
Perhaps most crucially, customer retention depends on what type of customers you sell to. Enterprise businesses typically churn less often due to the complexity of their purchase agreements, while individual customers can churn much more quickly with fewer negative consequences in most cases.
The average SaaS customer retention rate is approximately 68%. Values are between 55% (for businesses with <$300k annual recurring revenue, or ARR) and 72% (businesses with $15-30M ARR). A good CRR for SaaS companies is generally 70% or higher, while those above 85% are top performers.
Another notable SaaS metric, net revenue retention (NRR), can help highlight the level of consistent revenue you’re seeing from your customer base. It shows the revenue you retain from the customers you retain over a specific period. NRR was 102% for private SaaS companies in 2023 (NRR can exceed 100% if customer spending increases, while CRR can’t ever exceed 100%).
The banking industry has an average CRR of 75%, tying with the overall average.
As both a service and a trust-oriented industry, banks can hold onto customers for longer after initially earning their loyalty. Customers typically hold onto their checking and savings accounts for around 17 years, making churn relatively low.
The average CRR for commercial insurance businesses is 83%. The market is extremely competitive, but customers here are less likely to churn than in most other industries. This could be due to the intricate nature of insurance policies and the tendency for some policies to kick in after an introductory period.
Complexities and competition in the healthcare industry make it difficult for businesses (like assisted living companies, independent retail pharmacies or medical waste handling services) to stand out. However, the average retention rate is still above average at 77%.
The hospitality and lodging industry has the lowest average CRR of all the industries we reviewed, at 55%. Customers in this industry prioritize price, and discounts and promotions can strongly influence their choices, perhaps more than most other industries. This focus on pricing makes it challenging to build loyalty long-term.
The average CRR for IT service companies is a high 81%. Like banking and financial services, IT companies provide a service-based model that effectively builds customer loyalty as long as the experience is positive.
Among manufacturing companies, a 67% CRR is average. Many manufacturing relationships are transaction-focused and can be one-time or sporadic, with customers purchasing based on specific needs or projects. This leads to less frequent interactions and a lower likelihood of building long-term relationships, hence lowering CRR.
Media companies (like streaming services) tie for the highest average retention rate at 84%. These companies often achieve high CRRs with diverse, quality content, convenient subscription models, personalized recommendations and continuous innovation.
Tied with media companies for the highest average CRR of 84% is professional services.
These companies focus on strong, enduring client relationships and prioritize customer satisfaction over all else. They leverage specialized expertise with a highly personalized (often one-on-one) service approach. Trust and reliability combine to lead the charge when it comes to customer retention.
The telecom industry sits near the middle of the pack as far as average retention rates, at 78%.
While many customers might stick with their telecom provider thanks to internal upgrades, frequent cross-selling and perceived service quality, others will avoid churn due to the vast competitor pool and the complications of changing providers.
To calculate your business’s customer retention rate, take your customer count at the end of a specific period and subtract the new customers you gained over that period.
Then, divide that number by your starting customer count for the same period and multiply by 100 to find the percentage of customers you retained.
![An image illustrating the formula for customer retention rate: [(ending customer count - new customers) ÷ starting customer count] X 100](https://www.venasolutions.com/hs-fs/hubfs/03%20Blog%20Files/Blog%20Images/Blog%20Articles/Average%20Customer%20Retention%20Rate%20by%20Industry/customer-retention-formula.png?width=1430&height=1328&name=customer-retention-formula.png)
While the base customer retention formula is consistent across industries, the nuances in its application can vary. Different industries face distinct challenges and operate under diverse business models, influencing how they interpret and utilize CRR.
Despite these industry-specific considerations, the core goal of CRR remains universal: measure customer loyalty and satisfaction.
Tailoring how you measure CRR to your industry’s dynamics allows you to gain more relevant insights into your customer relationships and adjust your retention strategy accordingly. If you regularly reassess the formula in the context of industry-specific factors, you’ll get a more accurate picture of your retention efforts.
Customer retention is the lifeblood of any successful business, influencing growth, profitability and long-term sustainability.
When customers continue to choose you over time, it goes beyond mere transactions — it builds a foundation for a robust and enduring business ecosystem.
Here are three reasons why customer retention is a critical metric for businesses to measure and monitor:
A good customer retention rate across all industries isn’t a reliable benchmark. “Good” depends on the nature of your business.
Subscription-based services like SaaS might expect higher retention rates due to the recurring nature of said subscriptions (although as we saw in the data earlier, these rates can vary widely between the type and size of SaaS companies). Industries with longer cycles, like manufacturing, may have lower (but still reasonable) retention rates.
The nuances of customer relationships mean there’s an extensive list of factors that can contribute to retention and churn.
When looking at the bigger picture, we’ve identified five overarching factors that can impact CRR:
The economic environment also has a significant impact on customer retention. With market instability, businesses and consumers alike are evaluating their expenses and making cuts to ride out the storm.
Monitoring these external factors and proactively preparing for potentially lower performance with scenario planning can help your business adjust for unexpected bumps in the road.
Increasing customer retention requires a combination of the right tools, insights, and personalized approaches. Each facet contributes to building valuable, lasting customer relationships.
It’s also a team effort across the entire organization. This is where finance business partnering becomes essential, making valuable data and knowledge available for key decision-makers in multiple departments.
Here are four tips to help you increase and plan for dependable revenue growth:
At the baseline, tracking retention is a fundamental practice for companies aiming to foster sustainable growth. You can’t plan for what you don’t know, and CRR is a key metric to help define the business’s overall performance.
Using cohort analysis, you can track your CRR with multiple constraints, such as across different periods or customer demographics.
You should also keep a close eye on complementary metrics to churn and retention—like customer engagement—that can help you spot trouble areas sooner with your products or services. You can measure engagement with metrics such as product adoption and utilization (are customers getting the full value of their current investment with you).
Tracking customer retention and factoring it into your business’s financial planning is easier when you can pull data directly from your CRM and ERP and consolidate it in one place.
Complete planning software like Vena can incorporate customer data from your CRM alongside data from your core business systems like your ERP for more accurate, data-driven decision-making.
Then, take it a step further by incorporating renewal and churn forecasts data into “what-if” scenario analysis to model different outcomes and proactively manage risk.
Your customer likely has many options. To get them to choose your business again and again, you’ll need to know more about them than their purchase history.
The more you know about your customers, the more you can personalize your engagement with them.
All this customer data holds powerful possibilities. Finance and customer success teams can forge a strong partnership to boost customer satisfaction and financial health in tandem via:
Understanding your target customers allows you to lead a customer-centric approach, aided by smooth cross-collaboration between your internal teams.
Loyalty programs are proven tools that can significantly impact both customer retention and revenue growth.
The overwhelming majority of Americans (80%) belong to at least one loyalty program. The customers who are members of a loyalty program are about 60% more likely to stick with that brand for a future purchase — and 43% more likely to purchase weekly.
Reward customers with something of value (which requires studying your customer base to uncover what’s going to resonate with them), and they’ll be more likely to return.
The best KPIs to measure customer retention rate are:
These metrics, in tandem with other customer data like customer acquisition cost (CAC), can help illustrate the full customer experience more clearly and point to specific facets of your strategy that may need addressing.
For instance, if you’re paying a pretty penny to get customers through the door, you better hope you’re also holding on to those customers.
Customer retention isn’t just a metric — it’s a strategic imperative shaping your business’s financial health, reputation and longevity.
By prioritizing customer satisfaction and implementing effective retention strategies, you can navigate challenges, outshine competitors and pave the way for sustained growth.
With Vena’s complete planning software, you can integrate your customer data and revenue data in one place to fuel your financial planning and analysis.
You can carry out your financial modeling in the familiar environment of Excel as Vena reconciles your data back to a centralized database and enables you to collaborate across departments. Share reports and dashboards with all your most important metrics—like CRR—with your customer-facing teams as well as your board and investors.
