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How to Use Predictive Analysis to Improve Customer Retention

For any business to succeed, you need to retain your customers. Once you win your customers’ loyalty, you can expect a good amount of revenue from repeat purchases. However, if you fail to retain your customers, your sales and profit margins are likely to suffer.

It is more cost-effective to retain your existing customers than to acquire new ones. Acquiring a new customer can be five times more expensive than retaining existing customers.

Customer retention strategies differ from industry to industry. However, regardless of the industry, data, artificial intelligence, and predictive analysis can help you improve customer retention.

Here are a few ways to use predictive analysis to retain your existing customers.

1. Personalize Offers for Your Customers

Discounts and offers are as old as the concept of marketing itself. But today, generic offers are no longer the most efficient way to market and sell products. Instead, personalize your offers for each customer. Predictive analysis is an excellent tool for personalization. It can analyze the behavior of your customers and predict how they are likely to act in the future.

For an e-commerce website, predictive analysis can take into account buyer preferences and interests based on previous shopping experiences. After analyzing their data and considering multiple variables, predictive analysis can help predict their behavior in the future.

Along with purchase history, demographic factors such as gender, age, location, interests can help determine some of your customers’  likely interests. Based on this information, you can offer them specifically designed deals.

Netflix, Amazon, and even small e-commerce businesses use predictive analysis to provide personalized suggestions to their customers. These suggestions make it easy for their customers to find something they love right away.

predictive analysis

Image via Amazon

2. Follow Up with Your Customers

Sometimes customers get distracted while shopping. They may have been looking for a product when all of a sudden, something important came up. They may have even added the product to their cart, but they abandoned it for some reason.

What can you do to make sure you don’t lose out on such a customer?

Follow up emails are a great way to maintain relationships with your customers. Predictive analysis can give you access to your customers’ purchase history and other data. Based on this, you can schedule emails to gently remind them about the items waiting in their carts and then provide a direct link to their shopping cart. A call-to-action (CTA) button in the email is another good option to ensure they can make a purchase right away.

Predictive analysis can also help you estimate the amount of time a specific product will last. Sephora uses this data to improve their customer retention. Whenever a customer purchases any product, they also calculate the estimated duration for which the product will last. If the duration of the product is around two months, they send out an email to their customers around that time.

predictive analysis

Image via In2sight

For example, this email can be sent a week before the product is estimated to run out. This email can also showcase complimentary products to customers because they are more likely to buy them as well. These reminders are a great way to ensure your customers stay loyal to your brand.

3. Segment Your Customers

Predictive analysis can provide a goldmine of information about your customers. Using this information, you can segment your customers into different groups. Then you to see how each segment and subgroup responds to your brand.

Once you have segmented your customers into different groups, you can tailor your content to suit them. You should also adopt different servicing strategies based on segmentation to increase customer retention.

Liftpoint Consulting created various customer segments based on how much customers had spent on their services. They also created segments based on the potential of their customers to make repeat purchases. They then developed marketing strategies that were customized for each segment. As a result, their sales increased by 40%.

Using predictive analysis, you will be able to see which age group or gender responds best to your promotional efforts. You will be able to figure out their frequency of purchase and value of purchase for different demographic groups. If you understand the differences between these segments, you can add more value to their customer experiences.

Segmentation is also integral to creating a successful social media strategy. You can see which social channel a specific segment is more active in. Accordingly, you can choose what kind of content and discounts to put on which channels. If your target audience is millennials, for example, you should increase your visibility on Instagram and Snapchat.

predictive analysis

Image via Instagram

But if you want to appeal to businesspeople, LinkedIn is a better option. After choosing your preferred social media channel, you will be able to send specific offers to a particular segment.

The more you segment your customers based on demographics, the more insights you will gain from their behavior. This will help you plan your promotional strategy better.


Predictive analysis and AI are changing the way the world of digital marketing works. Data is driving better results. beginning to recognize marketers recognize the ability of data to drive a better result. Be it in customer acquisition or customer retention; predictive analysis can help you grow your business.


Can you think of any other ways in which predictive analysis can improve customer retention? Please share your insights with us in the comments section below.

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