---
url: 'https://www.corbado.com/blog/password-reset-increase-customer-retention'
title: 'How to Use Password Resets to Increase Customer Retention'
description: 'Password resets hurt your conversion rate. However, with passkeys you can increase customer retention and streamline user access. This article tells how.'
lang: 'en'
author: 'Janina'
date: '2022-12-14T00:00:00.000Z'
lastModified: '2026-08-28T15:31:57.371Z'
keywords: 'password reset, password recovery'
category: 'Passkeys Strategy'
---

# How to Use Password Resets to Increase Customer Retention

## Key Facts

- **High-friction reset dropout**: About 10% of active users hit the password reset flow
  monthly; up to 75% abandon it, costing you 7.5% of high-intent users before any
  engagement.
- **Login failure rate**: A German B2C platform study found 27.4% of all initial logins
  fail due to mistyped credentials, default-password failures or automatic lockouts.
- **Reset attempt gap**: Only 4.9% of users who fail to log in even attempt a password
  reset, and 28.6% of those resets still fail after multiple tries.
- **Daily login failure toll**: Combined password-related failures mean 24.1% of all users
  cannot log in on any given day, representing direct retention and revenue loss.
- **Passkey login success rate**: FIDO data shows passkeys achieve 93% login success
  compared to 63% for passwords, removing the reset flow entirely.

## 1. Introduction: Password Resets Cost You Money

Poorly designed **password resets are costing you money**. A high-friction password reset
flow can lower [conversion rates](https://www.corbado.com/blog/logins-impact-checkout-conversion), as demanding
too many (or the wrong kind of) verification tasks can frustrate users and lead them to
abandon the reset flow altogether. To measure this impact precisely, see our
[authentication analytics](https://www.corbado.com/blog/authentication-analytics-playbook) playbook. To
illustrate this point, we have **identified 7 common factors that could be causing your
password reset flow to fail**. Subsequently, we provide a potential solution by going
passwordless and taking the password out of the equation.

Let's be honest: how often has the following happened to you? You wanted to access your
favorite online shop or your project management tool but couldn't remember your password.
Resetting the old and managing the new password is also cumbersome, so you just did not
log in or did not purchase.

The implementation of a password reset flow can be a painful step for people who are still
utilizing password-based authentication. It is:

- difficult to build
- adds needless friction to the user experience
- frequently leads to users abandoning the process entirely

On average, about **10% of your active users will pass through the password reset flow
each month**, depending on the size and percentage of existing vs. new customers. Of
those, up to **75% will drop out** partway through the password reset process.

To put that another way:

> With a high-friction password reset flow, you're losing up to 7.5% of high-intent users
> before they've even had a chance to engage with your application or do a purchase.

To illustrate this point, we have identified the 7 most common factors that could be
causing your password reset flow to fail.

## 2. These 7 Factors Break Password Reset Rates

Let's take a look at the factors that hurt password reset rates.

### 2.1 Users Need to Open Their Mailbox

Often the reset link is sent via email. However, this process may fail due to some
hurdles. Users may not open their mailbox to look for the reset email. As a result, they
may not see the reset link, which may cause the process to fail. Also, users have to
switch context, which interrupts the workflow and can cause the process to fail.

### 2.2 Users Have No Access to Their Mailbox

If users have forgotten their password, they need access to the email address associated
with their account in order to reset it. However, if they do not have it (either it's not
installed on their device or also have forgotten their email address password, they will
not be able to finish the password reset process.

### 2.3 Reset Emails Take Too Long to Arrive

If it takes too long for the password reset email to arrive, the reset link may be
expiring before the user has a chance to access. This can be caused by an incorrect server
configuration or an overly short expiry time.

### 2.4 Reset Emails May End Up in Spam

It is important to remember that if the reset password email is sent to the users, and it
ends up in their spam folder, they may never even see it. This means they will not be able
to reset their password and access their account.

### 2.5 Reset Links are Device-Bound

Often, links are sent via email during password reset. However, this is not best practice,
since links are device-bound, as they are usually opened on the device where the email is
opened. This can cause cross-device problems, for example if a user only has access to the
email on another device.

### 2.6 Users Need to Come Up with a New Password

For many users it is very annoying to have to come up with a new password, as this
represents another avoidable step in the login process.

### 2.7 Complexity Requirements for new Password

Having [complex password](https://www.corbado.com/blog/complex-passwords-cracked-soon) requirements for any
online process can be daunting for users. The password reset process becomes even worse
when the password is not accepted by the platform, and the user needs numerous attempts to
come up with a new password that meets the requirements.

## 3. 25% Abandon Logins Due to Complicated Password Resets

A recent study of a big German B2C platform serves as a brilliant example: The study found
that on average, **27.4% of all initial logins result in a failure** because users mistype
for example the email address or password. Furthermore, logging in with the "default
password" sometimes only works on the second or third attempt - or not at all.
Occasionally, users lock themselves out because they have tried to log in too many times
and encounter an automatic lockout that requires a password reset or a forced lockout for
30 minutes.

Only **4.9% of all users even attempt to reset their password**. This means that a large
majority of users who fail to log in on the first try never even try to reset their
password. Further, **28.6% of password resets fail even after multiple attempts**. This
means that **1.4% of all initial login attempts result in a failed password reset**.

Altogether, this results in **24.1% of all users failing to log in on any given day**.

![password reset rate failure](https://www.corbado.com/website-assets/6399dcaace5c3194d950701d_How_20to_20not_20fail_20in_20password_20reset_20_Grafik_4f59489bf3.jpg)

## 4. These 4 Factors Boost Customer Retention Rates

There are counter-measure for the above-mentioned issues in the password reset process.
Let's elaborate.

### 4.1 Offer Password Resets to Mobile Numbers

Offering [password resets](https://www.corbado.com/faq/passkeys-reduce-password-resets-otp-costs) to mobile
numbers ensures that users can access their accounts even if they have forgotten their
passwords. It allows users to reset their passwords without having to wait for an email or
going through a complicated reset process.

### 4.2 Send Email or SMS on Incomplete Password Resets

An effective method for boosting password reset
[conversion rate](https://www.corbado.com/blog/logins-impact-checkout-conversion) is to send an automated email
or SMS when a customer attempts to reset their password but fails to complete the process.
This simple step can help to improve the customer experience when it comes to resetting
their passwords, making them more likely to complete the process.

### 4.3 Offer Passwordless Logins via Magic Link or OTP

By leaning into passwordless solutions as an alternative to
[password resets](https://www.corbado.com/faq/passkeys-reduce-password-resets-otp-costs), you can delight your
users and increase conversion and engagement. Passwordless logins provide a secure and
efficient way for users to access their accounts without ever having to enter a password.
Instead, users are sent a unique link via email or a one-time passcode (OTP) to get access
to their accounts.

### 4.4 Offer Logins with Passkeys

For companies that want to improve not only the user experience but also increase their
account security, a login with passkeys is the ideal solution. The login credentials
cannot be forgotten because biometric login methods, such as
[Face ID](https://www.corbado.com/faq/is-face-id-passkey), Touch ID or [Windows Hello](https://www.corbado.com/glossary/windows-hello),
are used, allowing users to log in without creating a new password. Since passkeys persist
in [iCloud Keychain](https://www.corbado.com/glossary/icloud-keychain) or
[Google Password Manager](https://www.corbado.com/blog/how-to-use-google-password-manager), returning users enjoy
frictionless re-login that boosts long-term retention.

## 5. How Corbado can help

Six of the seven factors in section 2 happen after the user has left your site, which is
why most teams know only one thing about their reset flow: how many people finished it.
[Corbado Observe](https://www.corbado.com/observe) is the
[authentication observability](https://www.corbado.com/blog/authentication-observability) layer, and recovery is
one of the journeys it draws as a funnel of its own.

[Video: Login funnel](https://www.corbado.com/videos/login-funnel.mp4) ([See Login Funnel in Corbado Observe](https://www.corbado.com/observe/login-funnel))

- The **Funnel** page holds four separate diagrams. One of them starts at "Recovery
  Started", counts the password recovery flows your users actually initiate and shows
  where each stage loses them. The benchmark quoted in section 3 becomes your own number,
  per stage.
- **Friction** covers the logins that never turned into a reset. It separates the people
  who restarted and got in, or hit an error and got in, from the ones who ended up in
  account recovery, so a reset queue can be traced back to what happened just before it.
- Once you offer a second way in, **Login Methods** shows whether it is being taken: share
  of logins, completion, error rate and duration for passkey, password and social, grouped
  by application, OS or touchpoint.

## 6. Conclusion: Boost Your Customer Retention Rate Today

A poorly designed password reset flow can have huge consequences for your users and your
business. Why not avoid the issue altogether by going passwordless with passkeys? Just
imagine all the lost users you can regain by passkeys.

Passkeys are the ideal solution to increase the user retention of any
[e-commerce](https://www.corbado.com/passkeys-for-e-commerce) or SaaS company. FIDO data shows passkeys achieve
93% login success vs 63% for passwords. To quickly obtain these benefits without thinking
of complex integration or cross-device issues, take a look at Corbado's passkey-first
authentication solution. Integrate within minutes and transition your users smartly into
the passkey era. Trust me, your users will love it (and your
[conversion rate](https://www.corbado.com/blog/logins-impact-checkout-conversion) will prove it).

Start your passkey journey [for free today](https://app.corbado.com/signin#register)!

## Frequently Asked Questions

### How much revenue am I losing from a poorly designed password reset flow?

A high-friction password reset flow can cost up to 7.5% of high-intent users before they
engage with your product or make a purchase. This is because roughly 10% of active users
enter the reset flow each month and up to 75% of them abandon it partway through.

### Why do password reset emails fail to convert users back into the app?

Reset emails face multiple failure points: they can land in spam, take too long to arrive,
expire before the user clicks them or open on a different device than the one the user is
trying to access. Even after users receive the email, 28.6% of password resets still fail
after multiple attempts according to a German B2C platform study.

### What passwordless alternatives can I offer instead of a password reset flow?

You can offer magic links, one-time passcodes (OTP) sent via email or SMS or passkey-based
biometric login using Face ID, Touch ID or Windows Hello. Passkeys are the most durable
option because they sync through iCloud Keychain or Google Password Manager, enabling
frictionless re-login for returning users without any reset flow.

### How do passkeys specifically improve long-term customer retention compared to passwords?

Passkeys use biometric authentication so login credentials cannot be forgotten,
eliminating the primary trigger for password resets entirely. FIDO data cited in the
article shows passkeys achieve a 93% login success rate versus 63% for passwords, and
because passkeys persist in iCloud Keychain or Google Password Manager, returning users
re-authenticate without friction.