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How to Leverage Key Analytics to Increase Client Retention Rates

30 September 2020

Customer churn is one of the biggest challenges businesses face. If you want to maintain a steady flow of buyers and keep customers coming back for more, you have to stay relevant. This is particularly true in fast-paced markets. Gaining a competitive edge is all about understanding where your business is at, what customers want and need from you, and making data-backed decisions moving forward.

But it’s also more cost-effective.

It costs 5 times as much to attract a new customer as it does to retain an existing customer, which makes it far more worthwhile to focus on the clients you do have rather than chase after new ones. 

To do this, it’s important to have a deep understanding of your analytics. Once you know what’s working and what’s not, you can focus your efforts on retaining more customers and expanding your reach.

Here are the key analytics you should be leveraging. 

1. Understand Your Customers With Descriptive Analytics

Descriptive analytics outline who your customers are and what they need. It includes key information like their past browsing behavior, demographics, the channel they found you on and interact with you, their value to your business, and how often they buy from you.

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Descriptive analytics paint a picture of what your best customers look like. Through this, you can learn more about the types of customers that are likely to churn and compare them to the customers that stick around.

Perhaps customers that are more likely to churn favor a certain channel that you’re not so active on. Or maybe they tend to be interested in your less-popular services. You can use this information to make the experience better for them. 

For example, you might create a strategy for the channel they’re more active on or you might try and encourage them to connect with you elsewhere. Alternatively, you might use their feedback to improve their favorite services so they’re more enticing. 

Descriptive analytics interpret the historical data you have for your business to better understand the changes – particularly who is buying from you and why they’re buying from you. 

This information will help you reduce churn rates by tightening up your offers and targeting people who are similar to your best customers. Start by looking into at least a year’s worth of data from your business so you can cover the annual buying cycle, taking seasonal changes into account. This should give you a full overview of what’s been working and what hasn’t so that you can make improvements.

You can use descriptive analytics to create customer personas that match the different kinds of buyers that are most common to your brand. 

If you’re a B2C brand, consider attributes like customer interests, purchasing behavior, favored products, and lifestyle. For B2B brands, look at job roles, challenges, and the types of company your top customers work for. 

2. Profile Your Best Customers With CLV

Customer Lifetime Value (CLV) essentially shows you how valuable a customer is to your business throughout their entire buying journey. It’s how much revenue they bring over their lifespan, whether it’s 10 days or 10 years.

Calculate Your CLV

To calculate your CLV, you first need to calculate the average purchase value of each customer. Then, you can multiply that by the average purchase frequency rate to determine customer value. Finally, multiply that by the average customer lifespan to get your customer lifetime value.


Here’s an example. 

Let’s say you offer a Google ad campaign package for $1,500 per month and, on average, clients renew every three months (that’s your average purchase frequency rate). To work out customer value, you’d simply calculate 1500 x 4 because that’s how many times a year a customer makes a new investment. Let’s say your average customer lifespan is five years, which makes your average CLV $30,000. 

Understanding your CLV helps you determine which customers are worth the most to you – for example, which customers are more likely to invest in your higher-priced packages or are more likely to invest over a long period of time. You can then make profiles of these groups and focus your targeting efforts to attract more of them. 

As a result, you’ll increase retention rates because you’re only focusing on customers that are of the highest value to your business. 

3. Focus On Your Best-Selling Services With Average Order Value

Your Average Order Value (AOV) is the average amount each customer spends with your business in each purchasing cycle. 

Calculate Your AOV

Calculating this metric is simple; you just need to divide your total revenue over a specific timeframe by the number of orders made during that same period.

For example, if you landed 15 clients in six months and made $21,000 in revenue, your AOV would be $1,400. 

Knowing your AOV helps you pinpoint your best-selling products and services and focus on those. These are the services clients are more likely to stick around for and it will, therefore, increase your retention rates. On top of this, it also lets you know how much each customer is worth. This can fuel ad budgets and marketing efforts if you know exactly how much revenue you’ll be generating from each new client. 

Your Analytics Are the Key to Higher Retention Rates

The key to increasing retention rates is bringing all of this together to get detailed insights into your buyers, best-selling products, and revenue. The tricky part is determining where to allocate your marketing budget, especially if you’ve identified contrasting profiles. For example, one segment of buyer might be responsible for a high quantity of orders but has a low AOV, while another might buy less products but have a higher AOV.

Your job is to identify which personas to focus on and which ones serve your business better. If you want to generate a high turnover of inventory, then the buyer who places a high quantity of orders might be the better one to target. Alternatively, your focus is growing a loyal community with a steadily increasing revenue, the second profile might be your best bet. 

It’s every agency’s dream to have a loyal base of returning clients. But, in order to achieve this, you have to know exactly who your clients are, where they’re coming from, what they want from you, and how much they’re willing to spend.

Once you have a deep understanding of this, you can work to target only the most high-value clients and focus on your best-selling products to ensure clients keep coming back for more. 


Ryan Gould, Vice President of Strategy and Marketing Services, Elevation Marketing

From legacy Fortune 100 institutions to inventive start-ups, Ryan brings extensive experience with a wide range of B2B clients. He skillfully architects and manages the delivery of integrated marketing programs, and believes strongly in strategy, not just tactics, that effectively aligns sales and marketing teams within organizations.