How to use data to retain your best customers and increase revenue per customer

It is true that it costs less to retain a customer than to keep one.

There is a great deal of revenue potential in your existing customers because they can make repeat purchases from you.

Some businesses (like funeral parlours) don’t need any customer retention, but this type of business is scarce. Most businesses are interested in customer loyalty and creating a life-long relationship with their customers.

There are businesses where the frequency of purchase per customer is low. Jewellery stores don’t usually have much repeat business from the same customer because items like engagement or wedding rings or anniversary presents are usually once off.

Other businesses (like grocery stores) rely on repeat business from their customers and some even have subscription models and loyalty programs to ensure people re-order from them week after week.

Customer retention is often overlooked and relegated to one person or a small team but in reality it requires a great deal of focus.

Let’s explore some best practices when it comes to customer retention.

Provide incredible value, every time

You need to continually delight your customers and exceed their expectations. This is done by focusing on their needs and how you can shoulder their burdens.

Acclaimed marketing guru Gary Vaynerchuk suggests that marketing can be summed up with the single word:


If you truly care about your customers then you will consistently deliver them value and they will reward you with their loyalty.

Your customer must be the centre of everything

Every interaction and touchpoint with your customers must be carefully planned and developed to ensure that they are and remain happy.

The customer is always right.

Your product and service extends beyond the thing that you are selling – your complete offering includes the ad experience, the website experience, how you talk to customers on the phone and all the other interactions people have with your business.

You may need to do some thorough soul searching and testing with customers to continually improve their experience. 

Ask them for their opinions and to rate their experience. Their feedback will help you improve your business and will result in improved customer retention.

Convert customers into advocates

When your customers are thrilled by the service they’ve received, they will tell their friends and recommend you. This is the strongest form of marketing and literally nothing beats word of mouth.

Be relevant with data and segmentation

Digital marketing data gives us access to segmentation tools.

Not all customers are equal and you will find that the Pareto principle applies: 20% of your customers give you 80% of your revenue (roughly speaking).

The key is to find out which are your most valuable customers and treat them especially well BUT while treating all your customers with excellent care. Someone who is not currently one of your “VIPs” might potentially become one and if you don’t look after all your customers you will end up with major problems and revenue loss.

Relevance with segmentation means that when you communicate with customers you do so based on what you know about them. If your data tells you that your customer prefers t-shirts to hoodies, sell them more t-shirts (with an offer for a hoodie here and there).

Automation and data integration allows us to become HYPER relevant in our emails and other comms to customers for a more personal experience.

Customer retention tactics and models

Customers can be segmented based on a number of factors:

  • Recency (how long ago did they last buy from us?)
  • Frequency (how many times per month do they buy from us?)
  • Monetary value (how much do they normally spend with us per purchase?)

This model (known as the RFM model) allows you to group customers into categories (called segments) and then create specific messaging strategies for each segment.

Other data that you can use for segmentation include:

  • Acquisition source (Facebook, Google search, word of mouth etc)
  • Location (which country or city do they live in?)
  • What they buy from us
  • What devices they use (mobile, desktop or tablet)
  • What payment methods they use
  • Is it their first purchase?

You can set up different statuses and tags for each customer and feed this into your data warehouse. Segmentation should be based on behaviour – how have customers engaged with us and bought from us? Current behaviour is a good predictor of future behaviour.

Practical ways to apply customer segmentation

The overall objective of customer segmentation is to create RELEVANCE and not treat everyone the same.

Your customer segmentation data will give you insights into how to tailor your messaging, design and the choice of marketing channel.

If you give discounts, offers or promotions, these can be customised based on customer value (or potential value) and other behaviour you want to influence.

Your segmentation data might give you insights for product improvements – are you adequately serving all your customers and are there opportunities to improve their experience with product enhancements or customizations?

Start with looking at your customer data and try to spot significant ways you can cluster your customers. Don’t just segment for the sake of it, the key is to look at significance and actionable segmentation.

Once you have these, you can experiment with messaging and offers and see if there is any change in behaviour. Your objective is to encourage customer behaviour that results in improved revenue for your business.

You might need to refine your segmentation models over time as you learn – predictive analytics and AI tools can help you do this quickly.


Lapsed and lapsing customers are customers who are falling by the wayside and have not bought from you for a while.

Perhaps they have been lured by a competitor who offers lower prices. Maybe their circumstances have changed and they no longer need your product or service.

Data will give you the answers. Behavioural signals will predict when a customer is about to lapse and give you insight into why – and what you can do to prevent them from lapsing.

When a customer has lapsed and you are looking at reacquiring them, you need to understand why they left in the first place.

You can get this data by asking them directly and also from the behavioral signals available in your data warehouse.

You might also sell products that customers don’t need throughout their lifetimes, such as baby clothes. In this case your focus should be on acquisition and not retention or reacquisition.

Data-driven segmentation works in the reacquisition part of the customer lifecycle too. Relevance is key. You can segment lapsed customers based on when they lapsed, why they lapsed and their product preferences, previous purchasing behaviour and other factors.

Lucky for you all this data is available as long as you correctly store, manage and analyse it.

It’s your turn

What are your thoughts on retention and reacquisition? I’d love to hear from you – drop a comment below and continue the discussion…

About the author : Tony Lopes

Tony Lopes is an expert digital marketer who has worked across competitive industries since 2003. His broad experience covers SEO, Content Marketing, PPC, Email Marketing and Marketing Analytics. He works with sustainable, purpose-driven clients across the world and lives in Johannesburg, South Africa with his wife, daughters and Rhodesian Ridgebacks.

About the author : Tony Lopes

Tony Lopes is an expert digital marketer who has worked across competitive industries since 2003. His broad experience covers SEO, Content Marketing, PPC, Email Marketing and Marketing Analytics. He works with sustainable, purpose-driven clients across the world and lives in Johannesburg, South Africa with his wife, daughters and Rhodesian Ridgebacks.