The Role of Analytics in Customer Retention

Role of analytics

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Analytics is everywhere. Big data and other data-driven strategies have taken over the business world. Customer retention is no exception, and this post will review why and how analytics can help companies retain clients.

Customer Retention: What & Why

Customer retention refers to strategies and actions businesses take to boost customer loyalty and keep new customers. While occasional clients are not a bad thing, you want to retain as many as possible. It is better to have someone who purchases a $10 item 10 times than one who buys a $20 item once.

Also, loyal and regular clients reduce the costs of targeting and acquiring new ones. It helps lower the paid ads, marketing campaigns, and other strategies. Statistics show that acquiring a new client can be five times as expensive as retaining one. Data speaks for itself.

Other benefits include sustainable and steady growth, an easier and more accessible target audience, etc.

Analytics & Big Data in Businesses

As mentioned at the beginning of the post, data is everywhere. Businesses know how important it is to understand customer behavior, trends, and other actions. It allows you to focus on their needs and how you can best provide for them.

Data analytics is everywhere, from the pedometer on your Apple Watch that tells you how many steps you take daily to the algorithm that shows you the best videos based on your history.

As with any other technology, many obstacles are yet to be overcome, including ethics, data storage, and privacy. However, step by step, the world is becoming more data-driven and companies who aim to survive in the market must exploit this information to make smart decisions.

The Role of Analytics in Customer Retention

As its name suggests, this type of analytics considers data gathered over time to drive meaningful insights. It helps companies understand patterns, that is, why their clients stay or leave.

Once the insights and information are clear, it is much easier to implement new tactics that lead to success and profit. Another benefit is that it allows you to predict future customer retention.

Clients don’t become loyal customers without a good reason. There are causes and forces that drive them to trust you, and that is what you need to leverage.


Here are some of the main benefits provided by analytics in customer retention:

  • It minimizes your churn rate and as a result, it improves retention
  • It segments customers to identify high-value customers susceptible to leaving. These are the ones you should put more effort to keep
  • It identifies the best customer acquisition channels and which aren’t working
  • It helps plan marketing and financial strategies more accurately

Tips to Leverage Analytics in Customer Retention

  1. Identify Retention & Churn Rates

The first step is determining the percentage of customers you retain versus how many you lose. It is the starting point, and these are the measures to look back on after a certain period. Did your numbers increase or decrease?

  1. Identify the Most Valuable Clients

Your most valuable clients are those who provide more revenue and value to your business. Maybe they are wealthy or regular buyers. Whatever the reason, you don’t want to let them go.

There are two types: The ones you already secured and those who are likely to leave. You want to focus more on the second type without compromising the first’s loyalty.

  1. Identify Why Customers Leave

Is it after they purchase a specific item? Is it because you send them too many emails? There is always a hidden reason why clients lose trust in your company, even if it is only that a new local store offers better prices.

Using data to seek patterns is crucial to understanding where you went wrong. Mistakes happen to every company, but they are only fatal when people don’t learn from them.

  1. Flag Behaviors that Lead to Churn Rates

Learn to identify actions that probably mean a customer might leave. Maybe your data analytics team spotted that users who add items to their charts but don’t go through the purchase are more likely to leave. Once you see someone is doing that, you want to intervene without being aggressive.

This rule applies to everything, really. Businesses must learn to understand and segment users into categories. One customer that buys a product every two weeks without fault is not the same as someone who seems interested but never takes the leap.

The Bottom Line

Long story short, the role of analytics in customer retention consists of tracking and understanding customer behavior, trends, and patterns. Once you comprehend why people stay and leave, you can change whatever strategies necessary to your favor.

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