Customer Loyalty vs. Customer Retention: Getting the Most out of Both

Loyalty and retention are different, but connected, things. 

Customer retention, as it’s traditionally thought of, is narrowly focused on buying decisions. Loyalty is a more expansive concept. It is a measure of the feelings a customer has toward your brand. 

If an interaction with your brand leaves a customer feeling happy, satisfied, and valued, and they spend more money as a result, they’re actively choosing to stay loyal to your brand. Retaining a customer could be the result of inertia, forgetting to cancel a subscription for example, while loyalty means that a customer actively wants to spend money with you. 

Once you know that your customer wants to stick around and feels good about that desire, you can measure it. 

How great do they feel? Enough to write you a glowing review? Enough to tell all their friends and family how amazing you are?

The answers to these questions allows you to quantify all that great sentiment, telling you how valuable these customers are going to be to your brand. 

What customer retention really means

The way most people think of customer retention is flawed: RFM models only measure spending within a given period. That’s understandable, we need clear metrics on how much customers spend. But to truly understand customer retention, we have to broaden our definition. 

Rather than simply measuring spending, which tells you very little about what’s going on with the customer overall, judge retention by whether they’re engaging with, and taking actions to promote, your brand.

If they’re referring you to friends, sharing your brand on social media, or leaving positive reviews, they’re still around, still engaging and still driving revenue to your business, even if indirectly through customer advocacy. 

Once you start to measure these advocacy actions and gain insights into how loyal and enthusiastic your customers are, you can develop ways to drive more actions. 

What is customer loyalty?

Customer loyalty is the enduring emotional and behavioural commitment a customer has to your brand. Emotional loyalty is the feeling—trust, identification, and affinity—that makes your brand the first choice even when alternatives exist.

Behavioural loyalty is how that feeling shows up in actions: choosing you repeatedly, engaging with your content, advocating for you, and overlooking minor missteps because the relationship matters.

It’s important to distinguish transactional perks from emotional bonds. Points, discounts, and freebies can trigger short-term repeat purchases, but they don’t guarantee loyalty on their own. True loyalty is built through consistent, personal, and memorable experiences that make customers feel seen and valued, so they keep coming back by choice, not just for a deal. 

Loyalty indicators:

• Chooses your brand when price and convenience are equal (brand preference at the same price)
• Willingness to recommend (e.g., positive reviews, high NPS, referrals)
• Ongoing brand advocacy (publicly defends or praises your brand)
• User-generated content (UGC), such as testimonials, social posts, and unprompted mentions

Difference between customer retention and customer loyalty

Do customer retention and loyalty mean the same thing? Not quite. The difference between customer retention and customer loyalty is that retention is about whether a customer stays, while loyalty explains why they choose to stay, and how strongly they’ll advocate for you.

In other words, loyalty vs. retention isn’t either/or; loyalty is the engine that sustains and amplifies retention.

Mini-framework:

• Retention = binary outcome (stays/leaves).
  Closest metrics: repeat purchase rate, churn/attrition, time between purchases, subscription renewal, active customer rate.
  
  
• Loyalty = scalable emotional preference + advocacy.
  Closest metrics: brand preference at parity price, NPS and willingness to recommend, referral rate, UGC volume/quality, review scores, share of wallet, willingness to pay a premium.

Example: Two customers buy from the same apparel brand twice this year. Customer A returns only when offered a 25% discount, then goes quiet. They’re “retained,” but not loyal. Customer B buys again at full price, posts an outfit photo tagging the brand, and refers a friend. Both count toward retention, but only Customer B demonstrates loyalty. This illustrates the difference between customer loyalty and customer retention and why loyalty-driven behaviours predict longer-term revenue and advocacy.

Why you need retention and loyalty

While these terms describe different concepts, there is no absolute boundary separating customer retention from loyalty. This is especially true of ecommerce and retail, where retention usually means customers taking an active decision spend more money. Rather than relying on the inertia of failing to cancel a subscription, ecommerce brands need their customers to choose to spend again.  

Key metrics and measurement framework

Use this framework to operationalise customer loyalty vs retention and keep your customer retention and loyalty programs aligned:

Retention metrics explained

• Repeat Purchase Rate (RPR): The percentage of customers who make more than one purchase in a given window. Signals how effectively you prompt a second order—the critical step to long-term value.
• Churn/Attrition Rate: The percentage who lapse or cancel by period-end. Useful for spotting at-risk cohorts and testing save tactics; define “lapsed” by your category’s natural buying cycle.
• Interpurchase Time (Time Between Purchases): Median/average days between orders. Shorter intervals indicate healthier engagement; outliers help identify replenishment vs. occasional buyers.
• Renewal Rate (subscriptions): Percentage of subscribers who renew at the end of term. Segment by tenure and price/discount exposure to diagnose value vs. inertia-driven renewals.
• Cohort Retention: Share of a starting cohort that remains active over time. Visualise with retention curves to compare how launches, CX changes, or campaigns impact long-run behaviour.
• Gross/Net Revenue Retention (GRR/NRR): GRR = revenue kept from an existing base excluding expansion; NRR includes expansion (upsell/cross-sell). Highlights whether you’re growing revenue without relying on new customers.

Loyalty metrics explained

• Net Promoter Score (NPS): Measures willingness to recommend (0–10) and yields a holistic sentiment indicator. Track by journey stage to tie emotion to outcomes (e.g., post-delivery vs. post-support).
• Referral Rate: Share of customers who refer at least one friend, or referrals per 100 customers. Strong proxy for trust and delight; attribute referred revenue to quantify impact.
• UGC Volume/Quality: Count and assess reviews, social posts, and tagged content. Look beyond volume to authenticity and reach; map UGC spikes to moments of “surprise and delight.”
• Share of Wallet at Parity Price: Your share of a customer’s category spend when prices/features are similar. If customers still choose you at the same price, you’ve built true preference.
• Willingness to Pay a Premium: The degree to which customers accept non-discounted or higher-priced options. Rising full-price repeat rate and stable AOV at lower promo depth signal emotional loyalty.
• Loyalty Program Engagement: Enrolment, activation, point accrual/redemption, and tier progression. Healthy engagement indicates more than transactional perks, especially when tied to experiential rewards (early access, community, recognition).

Foster loyalty to improve retention

What you do to encourage your customers to stick with your band has a big impact on how healthy your customer base is. You could rely on discounting and paid marketing campaigns to entice customers to spend again, or you could decide the best way to keep customers coming back is to win their loyalty and trust with an outstanding customer experience. 

If you create consistent, personalised experiences that demonstrate your appreciation for your customers, your retention rates will take care of themselves. 

If you want to know more about customer retention in general, check out our comprehensive guide here.

But for now, let's look at the ways customer loyalty can feed into customer retention. 

• Make your loyalty programme count: A welcoming, easy-to-use scheme that rewards repeat customers is a great place to start. Reward customers with loyalty points for sticking with your brand.
• Create a community: Offer loyalty points when customers refer friends and build a community around your brand. You can monitor how much of an impact this initiative has by monitoring loyalty point uptake, giving you insights into who your most loyal customers really are. 
• Surprise and delight: Surprise your customers with something unexpected, like a small gift, a personal note, or a special offer. Create a customer-first culture that drops moments of delight into your CX.
• Deliver a consistent all-round experience: From the speed of your site to your post-sales customer service, every part of your business that touches the customer can build, or detract from, loyalty. Getting this right is a long-term endeavour, so get started by looking for small changes you can make. 
• Engage with customers at the right time and with the right message: Regularly engage with customers through social media, email newsletters, or events. It takes a mature tech stack to fully understand which messages to push at any given time and to be able to do this automatically. But whatever stage of maturity you’re at, connecting the dots between software packages will give you a better understanding of when and how to speak to your customers.

How to build genuine loyalty

Genuine loyalty is so much more than a simple reward scheme: it's about fostering a deep-seated connection with your customers. 

As important as loyalty programmes are, genuine customer loyalty is about the whole customer experience, where heartfelt interactions mean customers make an active decision to spend money with you again and again. 

It’s a process of forging genuine connections and trust, the emotional impact of which often outweighs the transactional benefits of a purchase. 

Unlock the full potential of customer loyalty and retention with Mention Me.  Ready to transform casual buyers into lifelong advocates that spend more, come back often and bring their friends? Discover how with Mention Me. Request a demo.

FAQs

How to create customer loyalty and retention?

Deliver consistent value through great products, frictionless experiences, and responsive support. Personalise journeys and design loyalty programmes that blend transactional perks with emotional rewards like recognition and community. Activate advocacy with easy referrals and UGC, and close the loop on feedback to earn trust.

What is customer loyalty and retention?

Customer loyalty is the emotional and behavioural commitment that makes customers prefer your brand, recommend it, and come back by choice. Customer retention is the outcome that a customer continues buying in a given period. Together, customer retention and loyalty drive sustainable growth by combining who stays with why they stay.

How to measure customer loyalty and retention?

Measure retention with repeat purchase rate, churn/attrition, inter‑purchase time, and renewal rate to see if customers stay active. Measure loyalty with NPS, referral rate and referred revenue, UGC volume/quality, share of wallet at price parity, and willingness to pay a premium to understand preference and advocacy. Use cohort analysis to connect loyalty signals to retention outcomes.

How to increase customer retention and loyalty?

Focus on the first‑to‑second purchase journey, remove friction across checkout, delivery, and returns, and improve service responsiveness. Elevate your loyalty programme with experiential rewards and recognition, and trigger life cycle messages based on behaviour and predicted risk. Encourage authentic advocacy and communicate improvements to build confidence and repeat choice.

What is the difference between customer loyalty and customer retention?

The difference between customer loyalty and customer retention is that retention is a binary outcome (stays or leaves), while loyalty is a scalable emotional preference that drives advocacy and higher lifetime value. In customer loyalty vs retention terms, retention shows the if, loyalty explains the why, predicting referrals, UGC, and willingness to pay at the same price or a premium.