May 11, 2017 at 3:06 PM
The amount of data now available to us is overwhelming: every two days we create as much information as we did from the beginning of time until 2003. As a Marketer, the challenge is determining what data is useful and how to turn it into marketing wisdom that leads to customer retention and growth. Considering that it costs 5 times as much to on-board a customer than it is to retain one, companies would do well to leverage their data to develop and drive retention strategies.
In this post, I look at 3 ways data can be used to build and drive customer retention strategies that result in reduced churn rates and open new avenues for meaningful engagement with target markets.
1. Data tells you which customers to keep, and how to keep them
Companies need to sift through their base and identify the right customers to retain. How? By listening to what their data tells them about their customers. With the convergence of multiple data channels – from purchasing preference, value and frequency – businesses are able to filter their customers from most to least valuable. For example, store card data helps large retailers segment their markets and determine Customer Lifetime Value (CLV) with considerable accuracy and allows them to take a personal approach to each customer's propensity to churn. If a relatively high and frequent spender suddenly stops using their store cards, retailers can then look into root-causes and develop targeted retention strategies to get particular customers to re-engage.
Add to this credit data that helps identify financial motivations behind customer disengagement, and retailers get a clearer picture of causalities and can make informed decisions on implementing retention strategies around certain customer types – or not.
2. Data helps you fine tune your message and promote the right products
By analysing metrics such as purchase habits, product ratings and reviews, e-commerce retailers can channel individualised messaging to millions of customers worldwide. Data analytics aids in creating brand stories that are relevant to each market segment and results in more individualised messaging that carries true weight with consumers. In addition, more acute market segmentation – thanks to data analytics – facilitates even more targeted marketing campaigns that yield higher ROI. This is a crucial factor for success in an age where customers demand more personalisation of products, services and after-sales care.
3. Data helps you predict customer behaviour and thereby influence it
CMOs are now embracing data analytics to help them more intimately understand the reasons behind customer disengagement. The Harvard Business Review discusses the role data analysis plays in understanding and predicting behavioural patterns that lead to customers churning or renewing their subscriptions to services or products. Just as data helps businesses understand the reasons for churn, it also presents them with opportunities to build more intimate relationships with their markets and encourage active and meaningful engagement.
Customer retention ultimately depends on how effectively you use your data
We currently have access to more data than ever before in human history, so the onus falls on each and every business to make it work for them. Customer attrition has always been a fact of life in the business world, but now we have the resources necessary to get closer to the cause of the issue. Data lets you understand your customers’ decisions on a large scale, meaning more targeted marketing efforts and more effective decision-making. These factors all contribute to improved customer satisfaction and brand loyalty – key determinants of a successful customer retention strategy.
But this all hinges on our ability to leverage data effectively and having a clear path toward centering the business, its process and products on the insights we derive from analytics. With the age of the customer far more than just a buzz phrase and businesses being forced to face up to the realities of the power shift happening around them, data analytics will be playing an increasingly pivotal role in bridging the divide between ourselves and our markets.
If you'd like to leverage your customer and transactional data to improve customer retention and drive customer growth, read about our Genius Customer Retention and Re-activation insights-as-a-service solution, which you can subscribe to on a monthly basis.