Difference Between Customer Loyalty and Customer Retention

The key difference between customer loyalty and customer retention is that customer loyalty is customer’s predisposition to select a brand with resistance to competitors, while customer retention is the process of keeping existing customers.

Customer retention and customer loyalty are very important concepts in a marketing strategy. Moreover, both these concepts are helpful to build sustainable competitor advantage.


1. Overview and Key Difference
2. What is Customer Loyalty
3. What is Customer Retention
4. Relationship Between Customer Loyalty and Customer Retention
5. Side by Side Comparison – Customer Loyalty vs Customer Retention in Tabular Form
6. Summary

What is Customer Loyalty?

Customer loyalty refers to customer’s longstanding preference towards a certain company or a brand. Basically, this measures the predisposition of a customer to select a specific product or business entity as their inclination and resistance to the competitor. Loyalty is a behavioural feature to measure whether the customer is willing to respond favourably towards the brand or organization consistently. Therefore, building and maintaining a positive customer relationship is one of the goals of today’s business organization. Although customer loyalty is an intangible asset to a business organization, it is tremendously important.

A loyal customer will repeatedly buy products from the business entity and encourage others to purchase as well, through word of mouth. Customer loyalty is somewhat beyond buying power and closely related to customer satisfaction. Customer satisfaction is proportionate to customer loyalty; this is because when customers are happy with the provided service or product features, they are not willing to switch to another brand or a company.

One of the advantages of customer loyalty is that it reduces the costs involved with consumer education and marketing. Moreover, customer experience management is also a competitive advantage in the context of customer loyalty. Loyalty programs, which help to retain loyal customers, as well as lower prices (when compared to competitors) and discounts for specific products also help to make sure that customers would prefer a certain brand or business over others in the market.

What is Customer Retention?

Customer retention refers to the ability of a company to retain/keep its customers for a specific period of time. It measures whether existing customers are willing to continue with the business. Therefore, customer retention is a very important factor for a business in terms of marketing. The objective of customer retention programs is to help organizations to retain customers as much as possible through customer loyalty and brand loyalty initiatives.

Most of the times, companies spend more money on customer acquisition. However, selling to customers who already have a relationship with business is much more cost-effective than customer acquisition. It is because companies need not attract, convert and educate them again in customer retention.

Strategies to Improve Customer Retention

  • Set customer expectations
  • Be the best and the trusted advisor for the customer
  • Trust based on relationships
  • Going beyond a strong relationship
  • A proactive approach to customer service
  • Personalized service.

What is the Relationship Between Customer Loyalty and Customer Retention?

Customer retention and customer loyalty are very much similar aspects of marketing, and they play a vital role in the current business context. Customer satisfaction is the base of both concepts. Basically, retention is part of loyalty since it’s a loyal customer who would buy the same brand again and again. Furthermore, both concepts are helpful to build sustainable competitor advantage.

What is the Difference Between  Customer Loyalty and Customer Retention?

The key difference between customer loyalty and customer retention is that customer retention is keeping the existing customers, whereas customer loyalty is the predisposition of customers to prefer a brand over other brands. Furthermore, customer retention is preventing the decline of customers, whereas customer loyalty is about growth. In short, retention prevents customer break up with the brand or product, whereas customer loyalty includes strengthening the relationship. However, customer retention efforts are short term based, and they are often reactive approaches. On the other hand, customer loyalty efforts are to aim long term relationships, and they are proactive.

Moreover, a further difference between customer loyalty and customer retention is their measurement. Customer retention rate is described as a percentage of customer population who were active during a specific time period. In contrast, customer loyalty measurement is described as the performance of individual customers. Besides, the retention rate is a macro number, whereas loyalty measurement is a micro concept.

Summary – Customer Loyalty vs Customer Retention

Customer loyalty is basically a situation where a customer develops a long-standing preference or loyalty towards a particular product or service whereas customer retention is the ability of a company or product to retain its customers over some specified period. So, this is the key difference between customer loyalty and customer retention.


1. Klein, Mark. “Retention Is Not Loyalty.” DMNews.com, 2013, Available here.

Image Courtesy:

1. “Customer Satisfaction Survey” (Public Domain) via PublicDomainPictures.net
2. “Customers Gears Centered Center Customer Consumer” (CC0) via Max Pixel