Customer retention benchmarks vary widely by industry. SaaS companies aim for 85–90% annual retention, while retail averages around 60–70%. Financial services and telecom often target 75–85%, reflecting the higher switching costs in those sectors. Knowing your industry benchmark helps you assess performance and prioritise improvement efforts.
Acquiring customers is just the beginning. The real business value lies in keeping them. High-performing companies know that effective customer retention management is not just about loyalty. It’s about revenue, operational efficiency, and long-term brand value.
Whether you’re in SaaS, retail, finance, or telecom, tracking and comparing your customer retention rate to industry benchmarks helps you stay competitive and pinpoint areas for improvement. Beyond customers, employee retention also plays a critical role in maintaining consistent service delivery and reducing operational churn.
Let’s break down what you need to know about customer and employee retention benchmarks, how to calculate them, and how experience management platforms like can help you improve and act on the right metrics.
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Why Customer Retention Is Important
Retaining customers is significantly more cost-effective than acquiring new ones. Research consistently shows that increasing customer retention by just 5% can boost profits by 25–95%. Loyal customers not only buy more, but they also refer others, give valuable CX feedback, and are more forgiving during service hiccups.
How Do You Measure Customer Retention?
What Does Retention Rate Mean?
What is customer retention rate? Retention rate refers to the percentage of customers a business retains over a specific period. It indicates how well a company maintains its customer base, serving as a key performance metric in customer retention management.
Retention Rate Formula
To calculate the customer retention rate, use the following retention rate formula:
Retention Rate (%) = [(E – N) / S] × 100
Where:
- E = Number of customers at the end of the period
- N = Number of new customers acquired during the period
- S = Number of customers at the start of the period
This retention rate calculation gives you a clear percentage that can be tracked monthly, quarterly, or annually.
Customer Retention Benchmarks by Industry
Understanding how your customer retention rate compares to others in your industry is essential for setting realistic goals and identifying gaps. While “good” retention depends on your business model and customer lifecycle, industry averages offer a useful point of reference. Below is a table of typical annual retention rates across major sectors.
Industry | Average Customer Retention Rate |
SaaS / Software | 85% – 90% |
Telecommunications | 75% – 85% |
Financial Services | 80% – 90% |
E-commerce / Retail | 60% – 70% |
Hospitality / Travel | 55% – 70% |
Insurance | 80% – 90% |
B2B Services | 70% – 85% |
Media & Entertainment | 60% – 75% |
Consumer Goods (CPG) | 40% – 60% |
Healthcare Services | 70% – 85% |
These numbers reflect broad trends and should be adjusted based on your specific business type, target audience, and product or service complexity. For example, high-value, relationship-driven sectors like finance or insurance typically have higher retention, while transactional sectors like retail or media tend to see more churn.
How to Improve Customer Retention
Improving customer retention requires more than reactive support. It’s about delivering consistent value, personalised communication, and proactive issue resolution. Using the right tools for customer retention analytics, you can segment customers based on behaviour, satisfaction, and lifetime value, enabling tailored strategies for each group.
Implementing CRM and customer retention strategies together can significantly enhance outcomes. For example, combining your CRM data with real-time feedback from a CX platform like Staffino lets you close the loop quickly with dissatisfied customers and reinforce positive experiences for promoters.
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How to Increase User Retention
User retention goes beyond keeping customers subscribed. It’s about ensuring they actively use and benefit from your product or service. This is especially vital in SaaS, where inactive users are often a leading indicator of customer churn.
To increase user retention:
- Onboard users effectively with personalised guidance
- Monitor usage patterns and flag at-risk accounts
- Collect in-app feedback to identify friction points
- Offer targeted incentives or support at key lifecycle stages
Leveraging customer retention services like those offered by Staffino CX management platform can help you act on this data in real time, reducing churn vs retention confusion and enabling smarter retention efforts.
What Is a Good Turnover Rate?
In the context of both customers and employees, turnover refers to the rate at which individuals leave your company. A low turnover rate indicates strong satisfaction and engagement, while a high rate often signals internal or service-related issues.
For customers, acceptable churn rates vary by industry. For instance, B2C e-commerce might see monthly churn rates of 5–7%, while SaaS churn should ideally stay below 5% annually for healthy companies.
Customer Retention Examples
Here are a few customer retention examples to show what retention looks like in practice:
- A telecom provider launches a proactive outreach program for high-usage customers nearing contract expiration, improving their retention rate by 12%.
- A B2B SaaS company uses NPS surveys and Staffino to track detractors and trigger automated follow-ups, reducing churn by 20%.
- A retail brand sends personalised discount codes to dormant customers, reactivating 15% of them within one month.
These examples demonstrate how customer service retention tactics, when supported by data and automation, deliver tangible results.
How to Calculate Employee Turnover Rate
Just like customer churn, employee turnover is a critical metric for operational stability. Here’s how to calculate it:
Employee Turnover Rate (%) = (Number of separations during period / Average number of employees) × 100
This helps HR and CX leaders understand how internal changes and employee loyalty may impact service quality and customer experience.
How to Calculate Employee Retention Rate
To assess how well you’re retaining your employees, use this formula:
Employee Retention Rate (%) = [(Number of employees at end of period – New hires) / Number of employees at start of period] × 100
This metric is key to workforce planning and maintaining consistent customer interactions. High employee retention rates often correlate directly with better customer retention and satisfaction scores.
What Is a Good Employee Retention Rate?
Across industries, a good employee retention rate typically falls between 85% and 90% annually. However, this can vary based on sector and job type. For example, call centres and retail may see slightly lower averages due to seasonal hiring patterns, while tech and finance often aim for retention rates above 90%.
Suppose your retention rate is falling below industry benchmarks. In that case, it’s time to explore tools like Staffino, which allow you to gather employee feedback, improve employee engagement, and drive loyalty from the inside out.
Conclusion: Use Benchmarks as a Starting Point, Not the Finish Line
Customer and employee retention benchmarks provide valuable context, but true success comes from acting on insights. By consistently tracking metrics like retention rate, churn, and employee turnover, and comparing them to industry standards, you can identify blind spots and build more resilient business models.
Staffino goes beyond measurement—it enables action. With integrated feedback collection, real-time analytics, and automated follow-ups, Staffino helps businesses turn retention goals into customer experience success stories. Whether you’re looking to reduce SaaS churn, enhance customer service retention, or improve your employee retention rate, Staffino offers the right tools to drive continuous improvement.
Ready to take your retention strategy to the next level? Explore our customer retention solution or try our free demo below!
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FAQ
Customer retention is important because it drives long-term profitability, reduces acquisition costs, and strengthens brand loyalty. Retained customers tend to spend more, refer others, and are more likely to forgive occasional service hiccups, making them a valuable asset for sustainable business growth.
Customer retention is typically measured as a percentage of customers a company retains over a given period. The most common method uses the retention rate formula: [(E–N) / S] × 100, where E is the number of customers at the end, N is the number of new customers acquired, and S is the number at the start of the period.
Improving customer retention starts with understanding customer needs and acting on feedback. By using customer retention analytics, personalising communication, offering proactive support, and leveraging CRM tools, companies can reduce churn and strengthen loyalty over time.
To increase user retention, businesses should focus on effective onboarding, regular engagement, and timely support. Monitoring usage behaviour and offering tailored experiences, especially in SaaS, helps ensure users continue finding value and don’t lapse into inactivity.
A good turnover rate varies by industry, but lower is typically better. For customers, low churn (under 5% annually in SaaS) is ideal. For employees, a turnover rate under 10–15% annually is generally considered healthy, though this can vary based on sector and job type.
Examples of effective customer retention strategies include loyalty programs, personalised email follow-ups, proactive support outreach, reactivation campaigns for inactive users, and using NPS feedback to close the loop with detractors and thank promoters.
Employee turnover rate is calculated using the formula: (Number of separations during the period / Average number of employees) × 100. This helps track workforce stability and can signal deeper issues if rates are unusually high.
A good employee retention rate is typically above 85% annually, with top-performing organisations often exceeding 90%. High retention is a strong indicator of employee satisfaction and correlates closely with better customer service outcomes.
