Growing a profitable business isn't just about acquiring new customers—it's about keeping them coming back. Especially the ones who buy and spend the most. While brands tend to have sophisticated acquisition strategies, many still struggle with retention. If this is you, join us as we dive into three data-driven strategies to improve customer retention. 

First, How Good Is Your Current Retention Strategy?

One of the most effective ways to understand your brand's retention performance is through a layer cake analysis. 

Think of it as a visual story of your customers' purchasing behavior over time. Each "layer" represents a cohort of customers who made their first purchase in a specific quarter, and the thickness of that layer shows how much revenue they continue to generate over time.

Let's look at an example from an apparel brand. Their layer cake analysis reveals a strong acquisition program combined with good retention characteristics:

Each cohort's layer contributes to building a solid base of repeat business, showing this brand has successfully created a foundation of returning customers. However, deeper analysis reveals a common challenge: while their high value customers (HVCs) showed strong performance, the percentage of customers reaching HVC status was lower than desired.

This is an issue many brands run into. Although high value customers perform extremely well, very few customers ever reach this status. The solution lies in using data more strategically to identify, nurture, and retain these VIP customers.

3 Ways to Keep Your Best Customers Coming Back

So, how can you improve retention and ensure your superstar customers stick around? Let's explore three powerful strategies that leverage data to boost customer retention.

1. Use RFM to Find and Keep Your Best Customers

RFM segmentation is the foundation of effective retention marketing. It considers three pillars of customer behavior:

• Recency: How recently has the customer purchased?
• Frequency: How often do they purchase?
• Monetary: How much do they spend?

By analyzing these three factors together, you can identify which customers are most valuable to your business. Typically, your customers will fall into segments ranging from your highest value (those who bought recently, buy frequently, and spend a lot) to your lowest value (those who haven't bought in a while, made few purchases, and spent little).

This segmentation is powerful because it helps you:

• Identify your high value customers (typically the top 20% who often drive 65% or more of revenue)
• Spot customers who are at risk of churning before they're gone
• Tailor your marketing messages and offers to each segment
  

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2. Engage Customers Through the Right Channels

Not all high value customers, or potential high value customers, are reachable through the same channels. Some might have opted-out of email but are active on SMS, while others might be unreachable through digital channels entirely. The solution? A waterfall approach to retention marketing.

Here's how it works:

• For those only available on one digital channel, focus your efforts there
• For customers opted into both email and SMS, use Daasity Audiences to ensure consistent messaging across both channels
• For high value customers who are opted-out of digital communications, consider periodic direct mail campaigns as a final touchpoint

This systematic approach ensures no valuable customer falls through the cracks.

3. Send Triggered Messages Based on Purchase Patterns

Triggered messaging based on customer purchase patterns is a powerful way to drive repeat purchases. Instead of waiting for customers to remember to buy again, you can proactively reach out at the optimal moment based on their typical buying behavior. 

After all, what's more compelling: a generic 'Shop Now!' message, or a timely reminder that your favorite product is about to run out?

This approach is especially powerful for:

• Consumable products: Send reminders just before the product is likely to run out
• Beauty and skincare items: Time messages based on typical product shelf life
• Apparel: Analyze purchase time distribution to identify when customers typically buy again

To send your customers triggered messages, try Daasity Audiences, a reverse ETL tool that pushes data from your data warehouse into your marketing channels. 

Daasity Audiences lets you build customer segments (like high value customers) and send them to email and SMS platforms like Klaviyo, so you can communicate with your customers in a more targeted way. 

Timely, triggered messages ensure your retention marketing is relevant, reaching customers exactly when they're most likely to make another purchase.

Could Your Retention Strategy Use a Boost?

Understanding and improving customer retention is critical for sustainable business growth. By identifying your best customers and communicating with them at the right time, and in the right way, you can build stronger relationships and drive more repeat purchases.

If you’re ready to improve your retention marketing, request a free Layer Cake Analysis to understand how well you're retaining high value customers. Or, learn more about how Daasity Audiences can help you run highly-targeted retention campaigns.