What are the basics of customer retention?

1. Why customer retention? Confidential and copyright of Somo Global Ltd.January 17 1

2. What is retention?
Customer retention is the act of driving repeat purchase of a product or service so that a single conversion
becomes a habit, leading to:
Increased transactions Higher engagement Higher advocacy
Confidential and copyright of Somo Global Ltd. January 17 2

3. Retained and loyal customers
spend 30% more
More expensive to reach new
customers than existing ones
Increasing customer retention
by just 5% can lead to an
increase in profits up to-95%
+30% 7x +95%
Source: Buildfire.com, Nov 2016 Source: Buildfire.com, Nov 2016
Source: NG Data, “What is customer
retention?”, Sept. 2016
The importance of customer retention
Loyal customers are more valuable, easier to reach and more profitable
January 17 3Confidential and copyright of Somo Global Ltd.

4. Even though the importance of retention is clear to most businesses the ability to delivery a clear retention
capability is very low
74% 75% 76%
84%
14% 12% 13% 10%
0%
20%
40%
60%
80%
100%
Matching customers
across multiple devices
Understanding customer
behaviour over time
Tailoring messaging by
channel
Associating conversion
events with marketing
Digital priorities versus current capability
"Very important to
growth"
Strong capability in
place
Source: Econsultancy, “Customer Recognition Report”, Oct 2016
Retention Capability needs improvement
Confidential and copyright of Somo Global Ltd. January 17 4

5. Creating ‘sticky’ customers requires co-ordination across the customer journey and between departments, with each
element feeding into each other
3 key levers to a successful retention strategy
Confidential and copyright of Somo Global Ltd. January 17 5
Being relevant:
Knowing your
Customer actionable
insight
Contact strategy:
Acquiring and reaching
valuable customers
Optimal User Experience:
Removing friction from the
customer journey

6. 1. Building Relevance
January 17 6

7. Creating and analysing data sources from across the customer journey will create a single customer view and
provide valuable insight into your most loyal customers across multiple touchpoints
Creating actionable insight to build relevance
Confidential and copyright of Somo Global Ltd. January 17 7
Customer
Insight
-Purchase activity (conversion /
abandonment
-Response to marketing
-Customer service performance
-Payments / Loyalty
-Social sharing / Advocacy
-Desktop / Laptop
-Tablet
-Mobile
-In-store
-ROPO
-Location
-Address(es)
-Orders in progress
-Ratings and reviews
-Delivery preferences
-Wishlists
Targeted Relevant Contact
Strategy

8. 2. Optimal Contact Strategy
January 17 8

9. Optimise and build contact strategy from acquisition through to nurture through to active decreasing churn
Building retention through acquisition
Confidential and copyright of Somo Global Ltd. January 17 9
Push
Notifications
Search Social
In-App
messaging
Email
Mobile Ad
networks
Retargeting
SMS
Partnerships
Owned
Are you sending the right messages
to the right customers through the
right channel?
Which channels are most
appropriate to your segments?
Is your content customer-specific
and relevant?
Are you interacting in the
correct way online?
What interactions and data
are you gathering, how will
you action it?
Are your app notifications aligned
with your other channels?
Are you using attribution effectively
across channels to understand
customer behaviour?
Which channels are your most
effective in terms of conversion
and value with existing customers?

10. 3. First-Rate User Experience
January 17 10

11. Why Improve Customer Experience
Confidential and copyright of Somo Global Ltd. January 17 11
Improve Retention
Increase cross selling
and up selling
Improve Customer
satisfaction
42%
33%
32%

12. Customers Highly Value Great Experiences
Confidential and copyright of Somo Global Ltd. January 17 12
86% of customers will pay more for a better customer experience
By 2020, customer experience will overtake price and product as the key brand
differentiator.

13. Analytics traffic review of
digital channels
Customer journey mapping Full site and app functional
audit
1. 2. 3.
Optimise user experience by removing friction in the
customer journey
A great user experience across multiple channels is key to keeping customers coming back
January 17 13Confidential and copyright of Somo Global Ltd.

14. Conduct a root and branch review of your analytics platforms across
websites and apps
• Using your purchase funnel look deeply at customer churn through the
conversion process and identify the specific pain-points experienced by
users:
• Where are customers dropping out from the journey?
• Create contact strategies for cart abandonment.
• Identify bugs and broken pages for attention.
• Work across device types to get a clear understanding of whether
there are significant individual or cross channel implications:
• Is the site fit for purpose across all device and browser types?
• Is your iOS application outperforming your Android one?
• Long-list identified pain-points for fixing or flagging as specific
challenges to be investigated further in the front end.
1. Analytics review of digital channels
Confidential and copyright of Somo Global Ltd. January 17 14
BROWSING IS
THE MAIN
ACTIVITY ON
THE MOBILE
SITE
50%
1.4%
0.4%
MAIN POINT
OF DROP OFF,
3X MORE
LIKELY TO
ADD TO CART
ON DESKTOP
50% MOBILE
CART
CONVERT VS
35% DESKTOP
CART
Example mobile analysis of purchase funnel attrition

15. • Customer journey mapping is particularly useful as a way of
understanding the qualitative end-to-end process of fulfilling a specific goal,
task or mission
• They should be set up to accommodate multi-channel and multi-
device experiences that better reflect the way that consumers interact with
brands.
2. Customer journey mapping
Confidential and copyright of Somo Global Ltd. January 17 15
PURCHASE DELIVERY REPEATRETURNS
PRODUCT
EXPLORATION
PLANNINGINSPIRATION
Task: I want to buy a summer outfit but I don’t know what I want
Goal: Research, browse, compare and find a summer dress for a day out
Task: I want to buy a specific item
Goal: Buy a product as a returning customer
Task: I want to buy on credit
Goal: Set up a credit account
• Journeys are mapped out in the completion of a particular goal or mission
and during the process of doing so specific need states, challenges, pain- points
and next actions can be observed.
Journey maps identify a specific list of UX challenges for resolution and create a
clear understanding of customer needs throughout the mission and where
different channels are not meeting them.
• Furthermore, insight into where and how different channels and devices
are being used can help businesses to understand how to create a more
coherent and seamless omnichannel journey for existing customers.

16. • Perform a detailed functional audit of
all your channels to understand if you’re
meeting the expectations of existing
customers in terms of your service.
• Our functional audit takes the whole
consumer journey across the site and
poses questions of the functionality at each
stage, comparing it to direct competitors in
your business' space, but also to best in
class competitors from across different
verticals such as Amazon or Netflix.
• The purpose of this exercise is to
understand where your channels sit in
terms of your existing competitor set, but
also to look at the sorts of functionality that
customers desire from businesses due to
their experiences on commonly used
channels.
3. Full site and app functional audit
Confidential and copyright of Somo Global Ltd. January 17 16
Poor
Good
Average
BestinSector
Homepage Search
Search
Results
Product
Detail
Page
Sales
Page
Category
Landing
Sign InAccount
Servicing
Product Exploration Purchase
Inspiration
& Planning
Product
Overview
Page
BestinClass
Your
performance

17. Build relevance through
data:
Create a deeper
understanding of your
customers through analysis of
data to create a one to one
relationship through retained
customers
Create a contact strategy
framework that can optimise
your acquisition marketing
through to nurture and
ultimately creating retained
customers
Audit and improve all of
your digital channels from
app to mWeb to web in order
to build a friction-free
omnichannel experience that
has customers coming back
for more
Customer
Insight
Contact
Strategy
Customer
experience
How Somo can help
Our 180-strong team of data scientists, planners, strategists, product managers, UX and UI designers and
developers can build you a winning retention strategy in 2017
January 17 17Confidential and copyright of Somo Global Ltd.

18. Appendix
January 17 18Confidential and copyright of Somo Global Ltd.

19. The Importance of Data Collection
1st Customer Journey 2nd Customer Journey
Third party context data
Location
Time
Personalisation
(Context and relevance)
Data
Collection
Data allows personalisation
• Increases engagement
• Increases conversion
• Increases retention
• Makes marketing useful
Customer Insight:
Knowing your
customer

20. Reduce churn
Gathering and actioning
data effectively enables
businesses to
communicate with
customers with more
relevance ensuring that
customers move from
being one and done to
loyal or frequent visitors
Enable up- and cross-sell
Understanding of customer
behaviours around past
purchase or future desires
enables product- or
service-matching that is
grounded in associated
relevance
Increase customer
lifetime value
Ultimately a better
understanding of your
customers will lead to
better targetted marketing
and communications
increasing the lifetime
value of your customers.
Benefits of knowing your customers
Personalisation and well targeted messaging will create increased revenue and profitability
Confidential and copyright of Somo Global Ltd. January 17 20
Customer Insight:
Knowing your
customer

21. Segment customers
by customer lifetime
value
Create customer
segmentation by
loyalty / engagement
triggers
Review marketing
channel
effectiveness and
plan activity
1. 2. 3.
Developing a contact strategy for customer retention that
drives value and engagement
Creating a successful contact strategy allows businesses to more effectively target and engage loyal customers
January 17 21Confidential and copyright of Somo Global Ltd.
Contact strategy:
Reaching your
most valuable
customers

22. • Segment your existing customer base using
available customer data from sources
outlined above to identify the biggest
opportunity groups for retention marketing
• NURTURE high value / high engagement
customers through loyalty benefits
• REACTIVATE high value / low engagement
customers through return incentives for
lapsed or dormant visitors
• GROW spend from low value / high
engagement customers
Segment customer base by value and
engagement
Confidential and copyright of Somo Global Ltd. January 17 22
High
Low
Low High
Value
Engagement /
Purchase frequency
Lapsed
High Value +
Low Engagement
= REACTIVATE
 LoyalDormant Active
High Value +
High Engagement
= NURTURE
Low Value +
High Engagement
= GROW
Contact strategy:
Reaching your
most valuable
customers