We’ve talked a lot about retention rates and retention marketing in the past, and we’re big believers that loyal customers can help a business grow and thrive.

In recent years, reports have shown that 52% of SaaS providers have increased their customer retention spending.

They’re not wrong to do so. After all, a new customer costs 5x more than keeping an existing one.

DestinationCRM even published that reducing customer defection or churn by just 5% can lead to a 25%-125% increase in profits, depending on your industry.

So in this post, we’re zooming in on one of the most effective ways to guarantee your retention marketing success: by using cold hard data.

 What role does data analytics play when it comes to customer retention? More importantly, how do you use that data to inform strategies and tactics that boost customer loyalty?

We’ll discuss this and more as you read on. 

What are customer analytics? 

Customer analytics is a process by which data from customer behavior is used to help make key business decisions via market segmentation and predictive analytics. Businesses often analyze the customer journey specific to their industry to reach the most effective results from their marketing strategies

What are customer analytics tools?

Customer analytics tools are programs that help enhance the research and insights of customer behavior. The most common of these tools is Google Analytics which segments and categorizes your target customers and audiences accordingly. As you use customer analytics tools you’ll find trends in customer behavior that help determine customer lifetime value, predict future purchases, and more. 

The importance of data analytics on customer retention

It’s always worth repeating that data-driven strategies and campaigns will perform the best. Data can be used as a starting point for forming hypotheses that will inform specific marketing campaigns or even new product development.

 Here’s what the current landscape of data-driven marketing and customer retention looks like:

  • McKinsey found that “executive teams that make extensive use of customer data analytics across all business decisions see a 126% profit improvement over companies that don’t.”
  • The same study also showed, “Intensive users of customer analytics are 23 times more likely to outperform their competitors in terms of new-customer acquisition than non-intensive users, and nine times more likely to surpass them in customer loyalty.”
  • In an April 2018 Data & Marketing Association (DMA) and Winterberry Group joint report, a finding showed that more than half (53.2%) of North American marketers believed enhancing customer experience would lead to loyalty and retention, second only to increasing engagement.
  • Despite knowing the importance of data-driven marketing, a 2017 Forrester report said, only 15% of senior leaders at a company admitted to using customer data consistently to help make better business decisions.
  • Companies that use analytics are twice more likely to enjoy up to 45% higher ROI than competitors who don’t.

Ways to use data analytics to improve customer retention

Ready to see how you can use data to improve your retention rates? Here are some tactics.

Segment existing and incoming customers based on touchpoint behaviors

You can gather data about customers from their very first contact point. Attribution marketing helps us determine where users might have come from or what may have led them to convert into an actual sale.

A simple application of this can be in eCommerce, where you can segment buyers based on purchase history, preferences, or browsing items.

Create rules and tags on the backend of your marketing automation dashboard to document different interactions with your branded campaigns like “answered a survey,” “clicked a link on Campaign X.” Afterwards, add these customers to specific interest groups or segments.

 With this information, you can begin to offer personalized recommendations – a whopping 63% of millennials, 58% of Gen Xers, and 46% of Baby Boomers are willing to share personal information with companies if it meant being able to receive personalized offers.

This is a great example of targeting for cross-selling and upselling.

In the example above, a beauty retailer may send their customers different targeted products based on their existing preferences, previous purchases, and more. If customers had been browsing items for a specific skin concern, for instance, they’d get recommendations for beauty products to target those concerns.

If your brand can, collect any information you might get from customers themselves. Jumping off our previous example, you might be able to ask customers to fill in details about themselves, including their eye color, their skin type, and their biggest skin concerns.

Pair this up with other touchpoint behaviors across your store, and you’ll be able to get richer data — that leads to better segmentation and recommendations in the long run.

Practice good website hygiene

In many respects, website hygiene is just like personal hygiene: It involves a series of steps and best practices to ensure that your website’s healthy.

Now, you might be wondering: What does this have to do with improving retention rates?

The answer is a lot!

Slow page loading speeds, broken links, orphan pages, and code errors can quickly turn off your site visitors, causing a negative site experience with high bounce rates and low session times. These cause Google to penalize your website with a low ranking.

Performing regular checks on your site’s overall health can help you keep tabs on your website’s performance and quickly address bottlenecks and issues.

Here are some best practices that can ensure your website performance is in tip-top shape:

  • Consider using a Content Delivery Network (CDN). This helps distribute your website across different servers across the globe. In turn, customers will be served your data from the server nearest them, which reduces site loading speeds they may experience.
  • Evaluate your current website host. There may be better ones in the market who provide better performance without breaking the bank.
  • Optimize the size of your images. If you’re using large image files, this can really slow down your site. Always optimize them and reduce file sizes whenever possible.
  • Minimize your Javascript and CSS files. Just like images, large Javascript and CSS files can really slow down your site’s performance. You might hire a consultant or developer for this, but there are tools that will do this for you, like Script Minifier or Grunt.
  • Lessen web fonts. If you’re using a lot of fonts on your site, that may also contribute to its poorer performance. Stick with 1-2 at most, and remove any fonts and character styles you don’t actually use.

Here's an example of how you can use analytics to learn more about engagement.

Identify and reward your repeat customers.Acquiring new customers is great. But customer retention is better, especially among small business owners.

But how do you find them?

One way is by getting your existing customers to answer a Net Promoter Score survey. You can email this to those that have purchased from your website.

This is a great example of using product ratings to gain new customers.

If your business uses a subscription-based model, you can also add the Net Promoter Score on your website.

Another great example of using product ratings to gain new customers.

Another way is by creating a lead scoring system that’ll allow you to identify your loyal customers based on their purchases, how they engage with your content, and where they are in your sales funnel.

The data you collect using these two methods can also help you create a loyalty program that’ll reward them for your brand and products’ continuous patronage.

Once you’re ready, you can develop your customer loyalty program that’ll have your most loyal fans keep coming back and even become champions for your brand.

Here are some customer loyalty program mechanics to draw inspiration from:

  • Referral program: In this type of customer loyalty program, users are rewarded for referring a successful sale your way. This might be in the form of a unique code, invitations, or special links.
  • Tiered membership program: With tiered memberships, customers are rewarded the more they purchase from you. As they move up each tier, the rewards get better and better.
  • Points system: For every purchase your customer makes, they get a set number of points. They might use points to redeem rewards like discounts or trade in points for actual purchases.

Map customers using predictive models

Predictive analytics can help you use existing data you already have about your site visitors and customers to predict how your marketing campaigns will perform.

This is often used to help forecast revenue or how well people will receive marketing messages and promotions the company plans to put out. 

This type of analytics can help you retain your customers by identifying which users are at risk for churn, so you can create engagement campaigns that nurture and get these customers and users interested in your products again.

Consider reengagement campaigns like an extended free trial, a “we miss you” discount code, or sending high-value product use cases or inspiration to remind them about ways they can use your products.

Retarget by sending follow-ups to existing users.

In an earlier section, we mentioned you could use data about your customers to send personalized offers. But you can also use this data to follow up with them for non-promotional content.

For example, a cosmetics company may follow up with a recent customer who purchased a moisturizer from their online store. They could send a personalized guide to make the most moisturizing products or blog posts about different products that will heighten their current moisturizer’s benefits.

Another use case for sending follow-ups to existing users is by paying attention to your abandoned cart data. When you know your cart abandonment rate, you can use different tactics geared to recovering said abandoned carts and evaluate their performance.

Abandoned cart emails can help increase conversions exponentially.

Key Takeaways

 Data-driven marketing is smart marketing in every sense of the word. Data can inform your campaigns and next steps to tailor marketing messages and produce new products that customers will enjoy. Follow the tips above to help you boost customer retention using tried-and-true analytics you might already have access to.

Kevin Payne
Kevin Payne Content Marketing Specialist

Kevin Payne is a content marketing consultant that helps software companies build marketing funnels and implement content marketing campaigns to increase their inbound leads.

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