5 Ways to Use Data for Better Customer Retention

5 Ways to Use Data for Better Customer Retention
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Not many businesses pay a lot of attention to customer retention, which is a big mistake. If you look at the probability of selling something to a customer, it’s between 60% and 70% for existing customers, but only 5% to 20% for new customers. In other words, a retained customer is much more valuable.

To keep your customers happy and satisfied, you need to have a good customer retention strategy that will allow you to nurture customer loyalty. With a good strategy, not only will you boost your average order value, but you’ll also increase your customer’s lifetime value.

If you want to make the most out of your strategy, you need to know how to use the data you collect.

Make the most out of review data.

There are many ways data analytics impact decision-making for business, and going through customer reviews is just one of them. However, the reviews all of your customers leave on your website, and social media pages are among the most essential and valuable types of data you have.

These reviews can be both positive and negative, and it’s up to you to monitor those two types and know what that data represents.

  • Good reviews. These reviews help you identify customers that had a positive engagement with your brand and the elements of your business that positively influence customer retention. Then, take those elements, focus on them, and engage with the customers who left those positive reviews.
  • Bad reviews. Here, you’ll be able to identify all of your pain points and the issues in your brand or products that are driving customers away. Please find all the most significant problems customers have, figure out a way to tackle them, and once the problem has been solved, inform the customers about it.

Monitor social data

When customers leave reviews, they’re talking directly to you. But many consumers also talk about the brands they work with indirectly and discuss them in various places. This can be through news stories, social media, and forums, to name a few.

You must monitor these conversations and mentions because they will help you see what your customers are genuinely thinking and give you ideas on how to improve your retention rate.

Some of the things you need to look for while monitoring social data include:

  • Important topics. Identify the pain points that customers bring up in these conversations frequently, and figure out if they can be fixed and how serious they are. Think about whether those pain points are signs that customers are thinking about switching to one of your competitors.
  • Sentiment. Find out how satisfied your customers are with different aspects of your business, but especially customer service. As much as 89% of consumers are more likely to make another purchase after a positive customer service experience, please find out if customers are delighted.
  • Competitor analysis. Even if you’re not doing anything wrong, one of your competitors could have a great offer or marketing technique that’s going to pull customers away from your business. Take a look at how people discuss your competitors, and see if they are doing something good that you can take inspiration from.

Put all of your focus on high-quality leads.

As an established business, you probably already have a specific type of customer who purchases from you more than anyone else, or in other words, your primary target customers. Take a look at your ideal customer base and see what characteristics occur often and what all of your frequent customers have in common.

Once you’re done analyzing the data for your existing customers, take a look at the data you have that tells you a bit more about your leads or your potential future customers. Remember that not all leads were created equal and that you can quickly identify which ones are the most value through data.

You can analyze the data from your leads with the help of data management software and apply algorithms to compare your ideal customers’ characteristics and features to those of your leads. Such a tool can help you archive, back up, search, and recover data, to name a few of the functionalities.

And once you analyze all of the data, it’s time for segmentation. Customer segmentation is a term used to identify specific customer traits and characteristics and group people according to those traits. And with well-made customer segments, you’ll be able to easily identify which leads will most likely become your customers shortly.

Those with similar characteristics to your current customers have the most significant chance of being interested in your products and becoming the most loyal customers.

5 Ways to Use Data for Better Customer Retention

Retain the right customers

Not every customer that purchases something from your business has the potential to be a retained customer. And just like you can use segmentation to identify the most valuable leads, you can also use it to identify the customers that are most likely to return to your business.

When you segment customers into different groups, you will identify how each segment engages with your business and products. All of this data can allow you to identify your most valued customers.

Then, you can draw conclusions and insights from that data to see which of those groups has more repeat and loyal customers and create strategies that will help you increase retention for them.

Some of the data you can analyze include your customer’s age, gender, lifestyle, annual income, purchase history for different categories, purchase value, and purchase frequency. But out of all of these categories, customer value is the most important one.

Different types of customer value include lifetime value, historical value, average customer value by segment, and value over the next year. When you realize how to segment the customers by their value, it will be easier for you to identify which ones you need to put the most focus on.

Send targeted recommendations

No matter its niche, every online business sends targeted ads to its customers, hoping that will get them to make another purchase. Targeted recommendations depend on data, and they provide the customer with product recommendations they are most likely to be interested in.

Let’s say, for example, that you run an eCommerce clothing store. To create targeted recommendations for a customer that purchases shoes and accessories from your store, it makes sense to send them targeted recommendations with similar products. All you need to do is to get historical sales data.

However, it’s important to mention that you should be very careful with targeted recommendations. You need to remember that just one purchase isn’t enough to tell you what kind of targeted ads you should send to a customer. Alternatively, it is better to get to know your customers on a deeper level.

If you want your targeted recommendations to be relevant, try gathering as much customer data as possible from multiple locations and then sending them recommendations. This way, you’ll show your customers that you know them, and they’ll have more trust in your business and recommendations.

Final thought

Data is one of the most valuable things your business has, and if you don’t utilize it in the right way, it will just go to waste. Data analytics can be a powerful tool for those who want to increase customer retention. If you apply the strategies you just read about, you’ll see just how valuable data is.

 

Thank you for reading!

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