What is customer retention software?
Customer Retention Software
What is customer retention software?
The best way to keep customers returning to your business is not to treat them like customers. Though it might seem counterintuitive or backwards at first, this idea is actually at the core of something called customer retention—the technique of keeping shoppers loyal to your business.
Individuals from various markets toss around the word retention meaning different things. This is because customers interact with different types of businesses in unique ways, and what qualifies as a “retained” customer to one company might be seen as churn or loss to another. In the simplest way, customer retention means getting a first-time shopper to come back regularly and to prefer doing business with you over others.
Why is customer retention important? If a business relied only on first-time customers to drive revenue, before long there would be no new prospective buyers to target and sales/income would plummet.
To be truly successful, businesses have to get the same people coming back again and again. This is why it’s important to treat customers as more than just a source of profits. In the past, customer loyalty and retention happened through personal relationships—shop owners or employees would get to know customers personally, creating a rapport which drew them back more as friends than as sources of cash.
Today, this kind of face-to-face personal approach isn’t as easy, and for large corporate retailers with hundreds of thousands of customers, it’s just not possible. To meet this challenge, companies now use customer retention software, special programs and tools built to drive retention through data analysis. This software can discover and analyze the needs and preferences of each individual customer, allowing companies to craft better and more fulfilling shopping experiences. Better service means customers are happier and more likely to come back in the future, driving up the customer retention rate.
This software creates a more complex and holistic view of each customer as a real person with wants and needs rather than just a datapoint on a sales chart. The result is better retention with a fraction of the effort compared to past methods. Most importantly, these technologies can be applied to any field of business, both online and offline. Already, they are becoming indispensable in many markets and now is the best time for companies of all types and backgrounds to begin getting acquainted with them.
Customer retention tools
The variety of software tools available to help improve customer retention is huge. Every customer-facing program produces data which can be leveraged to keep shoppers coming back. However, there are a few customer retention tools which must always be included in any effective software data system.
The first class of tools are the data collectors which gather together knowledge about customers through interaction. Whenever an individual shops your store online, reacts to one of your ads or calls to action, makes a purchase at one of your stores, or engages in any other kind of contact with your business, this first line of software programs takes it down.
Once all this data is collected, it needs to be stored and organized in a useful way. This is the job of a CDP or customer data platform. In a CDP, each customer has their own individual profile, and each new piece of data is sorted and paired with the profile of the person who created it. By ordering all this data and connecting it with real customers, a comprehensive database is created, containing all the unique traits and preferences of your real-world clientele.
With all the info about your customers properly archived and ordered, this information can now be handed over to various analytics programs. These will examine every bit of knowledge you’ve collected and start looking for larger patterns—what people are buying, how often they’re visiting your store, which products they want, when they like to shop, how much they spend, and much more. Predictive analytics programs can even analyze these data to determine how they’ll behave in the future.
These insights are then passed on to a customer retention management team who views the condensed data on a simple dashboard or other visualizer program. From there, it is up to them to decide how to use what they’ve learned to create a better customer experience.
Customer retention examples
The data side of things is complex, but the benefits of retention software are tangible and impactful. Some customer retention examples may help to demonstrate.
A restaurant and culinary supply company gathers data about the content of purchases made both online and in store. An analytics program determines that its most popular product is a particular set of cookware which sees higher sales than all its other items. When these items are out of stock, the company notices that purchases and store visitation fall accordingly. The choice is made to keep more of the cookware sets in stock, and these dips in sales disappear.
A clothing retailer notices, with the help of its retention software, that its largest demographic, teens and young adults, tend only to purchase lower-cost items while avoiding most better brand merchandise. In order to move inventory and draw in more customers, management decides to offer periodic sales on these higher-priced items. The result is that these younger customers come into shop more often and sales on the better brand articles increase.
A sporting goods store with an online shop monitors the strings that shoppers type into their search bar. Their software indicates a significant correlation between searches for items the company doesn’t carry and purchases that are not carried to completion. The company’s analytics programs then crunch the data to figure out which items they should start to stock. After choosing a few dozen frequently searched items, they notice that more purchases are seen through to completion and new shoppers begin making accounts on their website.
These are just a few of the customer retention benefits which are possible with dedicated software. These examples demonstrate that such programs can be applied to practically any industry and show how easily the insights they generate can be leveraged for real-world gains.
Customer retention statistics
As you can see, the variety of customer retention statistics that can be generated by data software is nearly limitless. Depending on the kinds of programs a company sets up, they can access information regarding customer demographics, shopping habits, purchase sizes, favorite products and brands, preferred modes of shopping (in person/online), and much more.
These stats are important because they help determine who your customers are. Keeping customers loyal and enthusiastic about your business has always been about catering to their preferences and needs. Without understanding the people who shop with you, any attempt at building a better customer experience is at worst impossible and at best pure guesswork.
Statistics are vitally important for upper management, because they make up a large part of the data they look at through dedicated dashboards and visualizers. Customer retention models help in deciding how to brand your business, what to sell, how to construct ad campaigns, and who your competitors are. Your customer base is likely to be composed of hundreds of unique segments which each have their own tastes and reasons for buying from you. These stats-based models help clarify who your biggest demographics are and who should be given the highest priority in crafting a shopping experience.
Customer retention analytics
The most valuable use of statistics and store data, however, is as fuel for customer retention analytics. Simple statistics give a good picture of the way things are at a given moment—general data on customer numbers and demographics can be obtained, and sales figures can give an overarching view of the health of the company. Real insight, however, is only generated once these data are subjected to close analysis.
Analytics programs can delve deep into the mountains of free data and begin to seek out trends and connect bits of information together. They can help figure out which product lines adult women are likely to purchase the most during the summer. They can correlate purchase size to socioeconomic background. They can tell management which customers are at the greatest risk of switching to a competitor at any given time and explain exactly why.
Most valuable of all, some analytics programs are able to project the behavior of these data into the future. Predictive forecasting software now exists which uses AI technology to build accurate models of customer behavior far into the future. The world of business moves extremely quickly, and knowing what customers are going to do and want next month or next year allows companies to rise and meet these challenges and opportunities as they happen. This kind of customer retention data science is quickly becoming invaluable for companies which want to stay competitive, and as the technology improves, its ability to generate success and customer satisfaction will only increase.
Customer retention strategies
From all this information, it should now be apparent that these software programs are tools, ready to be deployed however the companies who use them see fit.
A list of customer retention strategies examples could go on forever, as each business will have its own unique customer base with its own special challenges. Most companies will have customer retention blogs detailing the ways they use the software to improve business and meet/surpass customer expectations. The resources available are endless, but the tools themselves are designed to make discovering opportunities and customer retention strategies easy.
One thing which is important to consider before starting is how you want to build your system. There are hundreds of companies out there offering specialized pieces of software to tackle individual parts of the data collection-organization-analysis process. Lexer is unique among these providers in that it offers dedicated solutions for each of these steps. Having a single system developed by one company is advantageous because it eliminates the time and energy required to integrate multiple modules produced by different parties.
Lexer strives to make customer retention and the data analytics process intuitive and simple. For any company looking to enter into the world of data-driven retail, Lexer offers carefully tailored solutions guaranteed to breed success.