Customer Retention versus Customer Loyalty

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I was asked the difference between customer retention and customer loyalty. Straightly speaking, both terms reflect loyalty.

There are many measures you could use to reflect customer retention and customer loyalty. For example, customer life time value, repeat purchase rate, and the net promoter score.

For companies with a customer loyalty program, they offer incentives to attract repeat purchases. They can measure the customer participation rate for the program and the incentive redemption rate. Both are measures for customer loyalty but they could serve as customer retention measures as well.

The label for a measure could be misleading when we don’t do a good job in defining what it means and the information it provides. What a company uses as customer retention measure could be the exact same measure another company uses for monitoring customer loyalty.

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