Customer loyalty vs. retention: What's the difference?

What is customer loyalty?

Customer loyalty refers to the emotional and psychological commitment a customer has to a brand, which leads them to consistently choose that brand over competitors, even when alternatives are available. This loyalty often extends beyond repeat purchases to include advocacy behaviors, such as referrals, social media endorsements and participation in loyalty programs.

Key measurements of customer loyalty include the following:

• Net Promoter Score (NPS). Measures customers' willingness to recommend the brand to others.
• Customer satisfaction (CSAT). Assesses how well the company meets or exceeds customer expectations.
• Engagement with loyalty programs. Tracks participation rates, points redemption and program tier progression.
• Referral rates. Measures how often loyal customers bring in new customers.

Some examples of customer loyalty in action are the following:

• A customer repeatedly buys the same skincare brand, despite new competitors, because they trust its ingredients.
• A customer promotes a brand on social media, voluntarily sharing positive experiences.
• A customer actively participates in a brand's loyalty program, aiming for premium status or exclusive rewards.

Retention focuses on a company's ability to keep customers over time, while loyalty reflects the strength of a customer's emotional connection to a brand.

What is customer retention?

Customer retention refers to a company's ability to keep customers over a period of time, ensuring they continue to purchase products or services. Retention strategies address practical needs, improve service reliability and offer incentives that make staying with the brand attractive in order to reduce churn.

Key measurements of customer retention include the following:

• Repeat purchase rate. Tracks how often customers return to buy again.
• Churn rate. Measures the percentage of customers lost over a defined period.
• Customer lifetime value. Estimates the total revenue a company can expect from a customer over the entire relationship.
• Renewal rate. Is relevant for subscription-based businesses to track how many customers renew their contracts or subscriptions.

Examples of customer retention in action are the following:

• A streaming service offers discounted annual plans to prevent cancellations.
• A SaaS provider assigns customer success managers to ensure smooth onboarding and support.
• An e-commerce platform sends targeted reminders and offers to customers who have not purchased recently.

5 differences between customer loyalty and retention

Five key differences between customer loyalty vs. retention include the following.

1. Focus

Customer retention focuses on keeping customers, often through incentives, convenience or contracts that encourage repeat purchases. Customer loyalty, on the other hand, emphasizes emotional connection, value, trust and advocacy, where customers continue buying because they want to, not because they have to.

2. Goals

The goal of retention is to reduce churn and maintain a steady customer base with as little turnover as possible. Loyalty aims to turn satisfied customers into brand advocates who actively promote the company through word of mouth, social media and referrals.

3. Measurement

Retention uses metrics such as repeat purchase rate, churn rate and renewal rate. On the other hand, loyalty uses indicators like NPS, CSAT scores, engagement with loyalty programs and social media advocacy.

4. Teams involved

Retention efforts typically involve operations, account management and customer success teams focused on minimizing service disruptions or competitive threats. Loyalty efforts often include marketing, CX and other brand-focused teams that design personalized experiences and loyalty programs to deepen emotional engagement and promote the product's or service's value.

5. Time horizon

Retention strategies often target short- to medium-term outcomes so customers continue purchasing either in the near future or during contract renewals. Loyalty strategies focus on long-term relationships, fostering a deep, enduring connection that sustains the brand over the years.

How to improve customer loyalty and retention

Building both customer loyalty and retention requires coordinated efforts across departments, with support from comprehensive data strategies and customer-centric practices.

Key approaches include the following:

• Unify customer data. Integrate customer data across all touchpoints, from purchase history to social media interactions, to create a single customer view. This enables more informed decision-making and personalized outreach.
• Embrace personalization. Use advanced analytics and AI tools to send tailored product recommendations, content and offers that resonate with individual preferences and behaviors.
• Ask customers for feedback. Implement structured feedback mechanisms, such as surveys and NPS tracking, to identify pain points and opportunities for improvement. Acting on customer input reinforces trust and signals a commitment to satisfaction.
• Enhance loyalty programs. Design loyalty programs that go beyond discounts and offer exclusive experiences, personalized rewards and recognition that strengthen emotional connections.
• Focus on proactive communication. Keep customers informed about product updates, service changes or promotions, using their preferred communication channels. Proactive engagement helps prevent churn and encourages ongoing interaction.

For CX teams, distinguishing between customer loyalty and customer retention is more than just a planning exercise. It is a strategic initiative aimed at increasing revenue and relationships. By understanding the different goals, metrics and approaches associated with each, organizations can create and execute strategies that strengthen both practical retention and emotional loyalty, ultimately driving sustainable business growth.

Griffin LaFleur is a MarketingOps and RevOps professional working for Swing Education. Throughout his career, LaFleur has also worked at agencies and independently as a B2B sales and marketing consultant.