---
title: "The Retention Gap: Q4 2025 Churn Benchmarks for Home Services"
date: 2026-02-10
url: https://getarch.com/blog/2025-churn-benchmarks-hvac
category: research
description: "We measured annual customer churn rates across 85+ home services companies. The results reveal a massive gap between best-in-class operators and the industry average."
source: Arch (getarch.com)
---

# The Retention Gap: Q4 2025 Churn Benchmarks for Home Services

*Published: 2026-02-10*

> We measured annual customer churn rates across 85+ home services companies. The results reveal a massive gap between best-in-class operators and the industry average.

We measured annual customer churn rates across 85+ home services companies nationwide. The goal: establish the first industry-wide benchmark so operators can see where they actually stand.

The results were striking.

## By the numbers

- **Best-in-class:** 7% annual churn

- **Industry average:** 40%

- **Worst performers:** 81%

- **Cost gap:** Acquiring a new customer costs roughly 13x more than keeping an existing one

Customer Churn Rate Distribution across 85+ home services companies

## Why it matters

The average contractor is replacing nearly half of their customer base every single year. That's not growth. That's a treadmill.

About half of the companies in our study fall above the 40% average line. These operators are spending aggressively on new customer acquisition while their existing customers quietly walk out the back door.

The other half figured out something important.

## What the top performers do differently

It's not a secret. It's a sequence.

**Step 1: Diagnose retention gaps.** Know which customers are at risk, why they're leaving, and how much revenue is walking out the door.

**Step 2: Act on it.** Proactive outreach, targeted reactivation, service reminders timed to when customers are most likely to churn.

**Step 3: Only then, invest heavily in new customer acquisition.**

This order matters because customer acquisition costs across the trades are rising fast. Pouring marketing dollars into a leaky bucket doesn't scale.

A retained customer base compounds. They buy more services over time, refer their neighbors, and cost a fraction to maintain.

## The math, simplified

Two companies. Same starting point. Very different outcomes.

|  
| Company A 
| Company B 

| Customers 
| 10,000 
| 10,000 

| Annual churn 
| 40% 
| 15% 

| Customers lost per year 
| 4,000 
| 1,500 

| Customers to replace 
| 4,000 
| 1,500 

| Relative acquisition cost 
| $$$$ 
| $$ 

Now multiply that gap over three years.

Company B isn't just saving on acquisition. It's building a fundamentally more valuable business, because retained customers keep buying, keep referring, and keep compounding.

## The bottom line

Most home services operators don't measure churn at all. They track new leads, new bookings, and revenue. But they rarely ask the most important question: how many of last year's customers came back this year?

That single number is the starting point.

If churn is high: stop the bleeding before investing another dollar in growth.

If churn is low: that's your signal to expand aggressively, because the foundation is solid.

Either way, the first step is knowing where you stand.

Want to see how your operation compares? We offer a complimentary benchmarking analysis for home services platforms and large independents.

[Request your benchmark →](/products/diagnostic)

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*Read the full article at https://getarch.com/blog/2025-churn-benchmarks-hvac*