Retail and ecommerce is more competitive than ever.
In a market like this, where people can purchase nearly any product online with just a few clicks, you can’t lean on acquisition alone to fuel your growth. Instead, improving customer retention rates and growing customer lifetime value are key to building a sustainably profitable business.
But all too often, businesses struggle to predict and prevent churn before it occurs—and the opportunity to upsell and cross-sell their customers is lost.
The solution lies in customer data. Although there are many benefits of collecting customer data, one of the most important benefits is an uptick in retention rates. Because collecting customer data allows you to implement data-driven retail strategies, you can acquire, grow, and retain customers at higher success rates with fewer resources.
Here’s how to fight churn with 4 data-driven strategies.
4 strategies to reduce customer churn
1. Connect your data to gain deep customer insights.
The biggest challenge retail brands face is a lack of genuine customer understanding.
Using customer insight tools such as Customer Data Platforms (CDPs), you can combine your data from every source and retail data system. This combined data creates a single customer view, or an all-in-one profile on detailing the engagement history of each individual customer.
With all of your data in one place, you can gain a better understanding of how your customers engage across channels. This information helps you create detailed customer personas to segment and personalize your communications.
2. Enrich your customer profiles to learn more.
Unfortunately, even with all of your owned, first-party, and zero-party data combined into one place, there are still sometimes gaps to fill.
The solution is to use data enrichment tools to form more complete customer profiles. Although many of these enrichment tools use third-party data such as Experian’s Mosaic, you can enrich your profiles with other types of data as well.
For example, you can use customer surveys to gather zero-party data that enriches profiles with product preferences, satisfaction scores, and more. Additionally, some tools, such as Lexer, enrich your profiles with predictive attributes such as churn risk or predictive lifetime value. Tools with predictive analytics can help you improve customer retention by flagging early indicators of churn and automating messages to re-engage customers before it’s too late.
3. Segment your customers to improve personalization.
One of the best ways to improve your marketing effectiveness and ultimately reduce churn is to segment your database and send out contextualized messages to different kinds of audiences.
For example, you might use RFM segmentation to segment customers by the recency, frequency, and monetary value of their purchases and use this information to prioritize your budget and effort. Alternatively, you could segment your database by gender to ensure that advertising creative includes products specific to the gender of your audience.
There are myriad ways to segment your audiences, and effective customer segmentation tools will allow you to be as broad or granular in your segmentation as you need. Click here to read 6 case studies demonstrating the importance of customer segmentation in retail.
4. Measure and optimize key retention metrics.
Finally, one of the most important strategies to help you reduce customer churn is to measure key customer retention metrics that help you monitor where your business stands, track changes, and set goals and milestones.
Customer retention metrics include customer lifetime value, NPS scores, churn risk, and more. Customer lifetime value is decidedly the most important retention metric, as customers with higher lifetime values contribute greater profits at lower margins. Learn how to measure customer lifetime value here.
However, no matter the metrics you decide to prioritize for your business, you should always measure omnichannel metrics to get the most complete picture of your business’s health and retention rates.
Reduce customer churn with a Customer Data Platform (CDP)
Customer Data Platforms (CDPs) like Lexer can help you reduce customer churn by providing a complete, omnichannel understanding of who your customers are, how they engage with your brand, what they’re likely to do in the future, and more.
When you choose the right CDP vendor for your business, you can begin seeing returns within weeks. These returns stem from deep customer intelligence, marketing automation, advanced segmentation and targeting, and omnichannel measurement. Learn how to measure the impact of a CDP on business transformation, revenue, cost savings, and the overall customer experience.
Lexer is the Customer Data Platform of choice for top brands like Igloo, Quiksilver, Rip Curl, Supergoop! Nine West, and more. As the only CDP built for retail, we help the world’s most iconic brands drive incremental sales growth through improved customer engagement.
This article was adapted from an article posted on Lexer.io. If you liked this, you’ll probably find more value in the original, in-depth version too. Read the full version of “Top 10 reasons for customer churn and how to battle them.”