The Difference Between Customer Retention and Customer Loyalty

In this clip from our eLearning series, Allison Hartsoe, CEO of Ambition Data, explores the difference between customer retention and customer loyalty. You'll also learn why strategies for the two require different approaches.

The difference between retention and loyalty

Customer loyalty means that your customers don't really think about the competition. They buy from your brand regularly, they don't think about going elsewhere to fulfill their needs, and they even advocate for your brand. Customer loyalty is typically a good indicator for growth. 

A high customer retention rate can be an indicator of customer loyalty, but that's not always the case. A high customer retention rate can also mean that it's hard for customers to leave your brand. Banking is such an example. In that case you can still have a high retention rate, but your customers can be frustrated with having to jump through hoops to go elsewhere which diminishes their advocacy. 

Customer retention is the act of getting someone to make that second or third purchase. It requires a different approach than customer loyalty - those customers who have already shown a high interest in your brand through several purchases. 

Loyalty is more of an emotional pull while retention is more of a transactional pull. By looking at the two this way, it's easy to see why strategies for customer retention and customer loyalty require different approaches.