March 17, 2015

Expert Interview: How Science Helps Your Business Retain Customers

Scott Schnaars is the Vice President of Sales and Marketing at Retention Science, a global leader in retention marketing. Their marketing platform helps businesses target, engage, and retain customers.

I invited Scott on the show to discuss his company’s MarketingSherpa Conference presentation and how one-to-one, customized messaging impacts lead nurturing efforts within marketing automation.

Here are a few highlights from our conversation:

TECHNOLOGYADVICE: Can you tell us how your company, Retention Science, helps businesses increase customer loyalty?

SCOTT: At Retention Science, we believe that marketing without data science is a mistake. It’s not really a scalable business model, and it’s put some marketers into a situation where they’re either wrong, or they’re very lucky.   

We’ve built a company that uses data modeling and machine learning to predict churn rate, future value of a customer, what products that customer might be interested in, and the minimum discount you’re going to need to give that customer to get them to convert at an individual level. We accomplish this score by collecting a lot of data about customer demographics, behaviors, and transactions in order to come up with a really targeted message for each individual customer.

TA: What impact can customer data have for companies using marketing automation software to nurture leads?

SCOTT: The impact is huge. We’re working with a company right now that sells a high-end home fitness product. And it’s several thousand dollars to buy this and it’s not a purchase that you make like when you go buy a Kindle book with 1-Click. Nobody’s 1-Clicking a $3,000 purchase— there’s a lot of thought that goes into that.

If you express interest in this piece of equipment, you can imagine the marketing that goes into that to get you to convert. With the ability to determine a particular user’s — what we call a “Retention Science propensity” — to purchase, we see the following on a graded scale: Is this person a 1 or a 10? What level can I predict that that person is going to purchase? It really changes the way that I market to that individual.

So if they have a very low purchase intent probability, that person may just get emails. But if they have a really high purchase intent probability, they might get personalized phone calls or a DVD in the mail. They might get somebody offering to come down to the store with their family to think about this. From a lead nurturing standpoint, it allows these organizations who sell really high-end goods to identify who is going to be their best customers— as fast as possible.

TA:  What are the common denominators between turning visitors into buyers, gaining repeat purchases, winning back business, and growing loyal customers?

SCOTT: It depends on who you’re asking in the organization. If you’re asking the CMO of the company, they’re interested in the campaigns that I’m running. Are they driving revenue? Do I have a better snapshot of who my customer is?

If you are talking to more of the day to day use of our platform, like any marketing person, what they’re interested in, is: is this tool making my life easier? And am I more efficient as a result of using this?

And the answer to all of those questions is, of course a strong yes.

But when it gets down to it, when I’m the CMO of an organization and I’m judged on if the campaign x that I run will generate more revenue than if I would have run something else, that’s where we can be really emphatic about saying yes on the ability to drive lift through this type of personalization.

TA: Cost wise, how does getting a new customer compare to nurturing and keeping an existing one?

SCOTT: Somewhere between 5x and 7x. It cost 5 to 7 times more to get that new customer than it does to go out and get an existing customer to buy more stuff.

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To learn more about Retention Science, visit retentionscience.com or connect with him on Twitter @Schnaars.

Listen to the entire show above in order to hear our full conversation, or download to listen later. You can subscribe to the TA Expert Interview Series via Soundcloud in order to get alerts about new episodes. You can also subscribe to just the marketing automation category here.

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This podcast was created and published by TechnologyAdvice in collaboration with our MarketingSherpa coverage. Interview conducted by Clark Buckner.

 

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