Series 2, Part 5: Using Customer Data to Improve Retention

So far in this series, I have provided insights based on our research of pool and spa industry point-of-sale (POS) transactions. The results point to the fact that the vast majority of pool and spa retailers are missing out on opportunities to leverage their customer data to improve their business. They are capturing a wealth of information through their point-of-sale systems, yet most are doing very little with it. For example, they don’t know which customers are at risk, which customers have defected, how to address these problems with more relevant targeted efforts and what is or is not working.

For some, the problem stems from a lack of knowledge or resources, while for others, it may be an untested belief in the status quo. In this age, with increased competition from the Internet, lower rates of new pool construction, and increased rivalry from mass retailers — particularly with the new Clorox pool brand — actively managing customer retention can be extremely important. For some, it could make the difference between success and failure. 

As this series continues, I will provide some education based on best practices from other industries and apply the findings to our proprietary database of 88,000 pool and spa consumers. 

The customer lifecycle

Retailers across the country generally agree that all customers are not the same. Most, however, scratch their heads when it comes to understanding and capitalizing on the differences. Using a model of customer behavior is an important starting point. 

The customer lifecycle model in Chart 2-5 highlights the different customer types, or lifecycle stages. Engaging with this model is an important first step in improving customer retention.

 Blog 2 5 Chart V1

As you can see, customer lifecycle is a term used to describe the progression that a customer goes through when considering, purchasing, using and maintaining loyalty to a product or service. At each stage there is risk of customer loss or defection. Identifying at-risk customers and stabilizing the relationship is a key goal of retention management.  

How do you know who is at risk? Analyzed correctly, point-of-sale data can offer valuable insights about which customers are at risk so that retention offers can be made that are relevant to each type of customer. The bottom line is this: Customers are communicating with you through your POS data, so customer retention involves learning how to listen and generate a relevant response.

All customers are at risk of defection

Take note: Customer loyalty doesn’t happen overnight. It is built and earned over time through deliberate actions on your part. It is important to be aware that even your safest loyal customers are constantly at risk of defection — and you must make your plans accordingly.  

Without a doubt, the very best way to avoid having to win back customers is to ensure that customers don’t leave in the first place. But if they defect, getting to the right customers quickly with the right message in a win-back program is critical. Your chances of selling again to a lost customer are still several times higher than your chances of selling to a new prospect, according to extensive research studies. Stay tuned as I provide more insight in future posts. 

Your turn

How do you know if any of your customers are at risk of defection? What do you do with this insight?  Do you track lost customers by name and use specific win-back programs? How is it working and can you share some details? What kind of help would you find beneficial? What questions do you have?

Read the previous post in this series: Series 2, Part 4: Are Your Customers Active or Inactive?

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