Fridays Lab has pioneered a new data analytics platform in a sector still in need of hyper-personalized marketing

Following the digital revolution, data analysis has become indispensable in running a business, but the sheer amount of analytics tools out there makes it hard to pick the right one.

But with Retentics, an artificial intelligence-powered analytics platform run on a Software-as-a-Service (SaaS) basis, businesses are in good hands as the platform can help them retain customers and improve revenue through specialized marketing services, according to Fridays Lab Inc., the developer of Retentics.

“Retentics finds loyal customers for its users but also identifies their prospective patrons and recommends tailored marketing campaigns and products that create true loyalty,” said Lim Yeongjae, the founder and chief executive officer of Fridays Lab.

The South Korean startup with two main global offices, in the US and Seoul, wowed the startup industry by securing funds with a Retentics prototype immediately after the company’s inception in December 2021.

Since that 600 million won ($467,000) in seed investment from Kakao Ventures Corp., the early-stage startup venture capital subsidiary of Korean information technology giant Kakao Corp., Fridays Lab has succeeded in two more rounds of capital fundraising, which have fattened its total investment to $3 million.

With the proceeds, Fridays Lab will continue to advance Retentics' services and technologies to find the perfect product market fit and make inroads into the global SaaS market, said Lim.

Retentics has so far won over 20 clients, including three in the US, since its official launch in February 2022.

Contents

• [How it begins] Versatile data analytics

  

  
  Fridays Lab is still a young company but its product Retentics has a longer history.
  
  The company founder Lim originally came up with the idea of the service during his MBA at Stephen M. Ross School of Business at the University of Michigan in the U.S. where he also pursued a dual degree program in data science.
  
  During his summer MBA internship with a major mortgage company in the US in 2019, Lim built a machine learning-powered segmentation algorithm that can speed up the evaluation process of loan applicants.
  
  The program was a success and Lim returned home to South Korea in 2020 to develop a more advanced prototype of a SaaS-based segmentation algorithm, Lim said.
  
  

  

  
  Before starting his own company, Lim, however, got a job offer as a data scientist from Miso Inc., a Korean startup operating the country’s leading home cleaning service online-to-offline (O2O) platform Miso, where he was given a chance to validate the algorithm, which later became a core technology for Retentics.
  
  At Miso, Lim led a team to build a program with machine learning and data analysis technologies to ramp up the supply of home cleaners to balance supply and demand. 
  
  “My team, called the Fulfillment Team, used the machine learning algorithm-based recommendation system to expand cleaner supply, and that worked really well,” said Lim.
  
  The recommendation algorithm is what Lim already developed in the US.
  
  “The successful application of the original algorithm at Miso reassured me of its versatility,” said Lim. This led him to start the process of developing the Retentics prototype into a real service.
  
  Lim amended and upgraded the prototype and in December 2021 started his own business to officially roll it out in the real market.              
  
  

  

  
  Lim joined hands with his fellow Michigan MBA alum Jang Jin-hyuk to set up Fridays Lab to launch Retentics, an analytics platform that focuses on data analysis to improve customer retention, one of the keys to business growth.
  
  The polished Retentics gained the interest of a few companies, including Coupang Flex under Korea’s e-commerce giant Coupang, thanks to its easy application, use and focused aim.
  
  The online health supplement store of major Korean pharmaceutical company Daewoong Pharmaceutical Co. and the online shopping site of Korean shoemaker Sappun were also initial clients of Retentics before its official launch.
  
  This grabbed the attention of VC firms.
  
  “Despite the growing importance of data analytics, only a handful of companies are using it as an effective business operation tool,” Chang Seung-ryong, director of Kakao Ventures, said following the VC's decision to invest in the AI-powered business intelligence tool startup.
  
  “Retentics enables data-backed marketing campaigns and customer management without professional data analysts.”

• [Value positioning 1] Bicycle vs car

  

  
  Retentics is a versatile data analytics tool that enables any company to manage customer journeys and retention without professional data analysis personnel thanks to its machine learning technologies. 
  
  It needs only transactional data for its AI to identify customer properties, produce effective indicators for target selection, forecast demand and foster repurchases.
  
  This SaaS-based analytics tool aims to help its clients – mainly e-commerce platform operators – boost customer loyalty with its AI-backed customer retention management solution and hyper-personalized recommendation service.
  
  According to Fridays Lab, about 87% of e-commerce operators neglect retention management due to a lack of data scientists, engineers and analysts or the absence of analytics programs dedicated to loyal customer retention.
  
  Retentics fills the void, arming its users with an effective growth marketing solution that does not require complex data analysis, the Korean startup says.
  
  Retentics has so far increased its business clients’ customer retention rate 12%, boosted its loyal customers threefold and upped revenue 1.5 times since its use.
  
  

  

  
  “Retentics simplifies the customer retention strategy, which can be very complex. This is the biggest advantage of using Retentics,” said Lim. 
  
  Compared to its bigger global peer Amplitude Inc., an American digital analytics platform and experimentation tool provider that aims to help its users get the information they need to take action and drive growth, Retentics offers its clients simpler and quicker solutions to help them meet narrower goals at much cheaper prices, added Lim.
  
  While Amplitude allows its users to gain insights not only to improve customer retention but also to build better products, Retentics focuses on actions needed to boost retention.
  
  The bigger US rival requires massive log data to analyze but Retentics requires only transactional data, the reason why the Korean analytics tool is much faster and cheaper in analyzing user behavior.
  
  Transactional data is information captured at the point of sale, which is much smaller than log data and is a valuable source of business intelligence.
  
  “This is like the choice between buying a car or a bicycle for commuting to work,” said Lim. “If you buy a car, you can use it for more than commuting to work. But if you only need a way to get to work, a bicycle or scooter should be enough.”
  
  “Retentics is like a scooter optimized for commuting to work.”
  
  The smaller Korean analytics platform analyzes transactional data to help its users come up with dashboards of various insights necessary to improve customer retention rates and produce tailored recommendation messages.

• [Value positioning 2] Retention rate, key to growth

  

  
  According to Harvard Business Review, it is about five to 25 times more expensive to attract new customers than to get existing customers to repurchase.
  
  This is because existing customers pass through a shorter funnel to purchase than new customers, and this is why improving the retention rate is important, according to Fridays Lab.
  
  A high retention rate indicates customers’ strong satisfaction with a product or service, which can lead to an increase in new customers on positive feedback from existing customers and revenue growth from loyal customers' repeat purchases.
  
  Thus, companies with high retention rates have the upper hand against their rivals and reduce customer acquisition costs.
  
  Without improvement in customer retention, it is hard to expect business growth, explains Fridays Lab.
  
  The emerging Korean startup has developed Retentics to help companies both big and small reinforce the retention rate of their services by expanding the amount of repeat customers.
  
  Bolstering repurchases is a must to improve the retention rate.
  
  “Our target is clear. We offer solutions to companies hoping to further bump up sales when they are encountering the slow acquisition of new customers,” said Lim. “But too frequent CRM messages can annoy existing customers and drive them away so Retentics offers solutions that can produce more personalized and advanced CRM marketing campaigns.”
  
  CRM is an acronym for customer relationship management.
  
  

  

  
  Thanks to Retentics’ highly personalized CRM-pushed messages recommending specific items to different customers, its clients saw about 1.8 times higher conversion rates than those without such messages, according to Fridays Lab.
  
  With its advanced machine learning model that separates prospective loyal customers from one-time customers, Retentics users can enjoy up to six times higher conversion rates once they send recommendation messages to such future patrons. 
  
  “Retentics is the one company that can provide hyper-personalized marketing, fitted seamlessly as a plug-in between Shopify and Klaviyo,” said Lim.    
  
  Shopify is a Canada-based e-commerce platform for online stores and retail point-of-sale systems, while Klaviyo is a global marketing automation platform primarily used for email and SMS marketing.
  
  Retentics targets a niche market that is overlooked by major SaaS analytics platforms, Lim said.

• [Technology forte] Segmentation, customer analysis dashboards, personalized marketing

  

  
  Retentics strives to drive its client’s growth with its three pillar services – segmentation, customer analysis dashboards and hyper-personalized marketing.
  
  Fridays Lab has developed its proprietary machine learning-based clustering algorithm optimized for the e-commerce business. Clustering is the machine learning process of organizing data into subgroups with similar attributes or elements.
  
  Powered by this AI clustering technology, Retentics automatically groups customers based on similar purchasing patterns after factoring in multiple variables that humans could easily miss.
  
  With just one click to upload transactional data in CSV/excel files, Retentics users will be given the most optimized segmentation models to identify their customers’ properties and distinguish regular patrons from one-time customers.
  
  Retentics' newly introduced seamless integration service also allows Shopify merchants to fully benefit from Retentics services by simply agreeing to add Fridays Lab's analytics platform as a data analytics plug-in.
  
  Based on segmentation, Retentics uses AI-powered data analytics technology to create dashboards where its users have deeper insights about customer experience with the cohort analysis of customer retention rates and lifetime value, as well as items and customer journeys.
  
  This step allows Retentics users to pinpoint the factors that make customers loyal and apply these to other customers to make them frequent visitors, too.
  
  

  

  
  Then how can businesses apply the successful journey of repeat customers to increase repurchases and loyal customers?
  
  Retentics helps this with its machine learning-powered recommendation system enabling personalized CRM messages for different customers with varied interests.
  
  Retentics studies customers’ historical transactions from their first moment of interaction with the e-commerce business and then recommends what they would most likely purchase next time.
  
  This algorithm has been very effective so far, according to Fridays Lab.
  
  Retentics client Woodo is a Korean startup operating an app where its members can share their own books. Retentics has been successful in improving Woodo’s customer retention with highly personalized recommendation messages. 
  
  In the latest test, Retentics picked customers who were highly likely to leave Woodo and separated them into two groups that would receive different marketing campaigns – one with Retentics’ tailored recommendation and the other group without it.
  
  The test results showed that the group that received Retentics recommendation messages had 230% more return customers than the other group, with a 280% higher unit price, Fridays Lab said.
  
  

  

  
  With such bespoke action plans for different customers, Retentics can help its users reduce CRM costs while increasing revenue.
  
  Retentics continues to upgrade its recommendation system to offer its users the most optimized technology, using the up-to-date machine learning algorithm, Fridays Lab said.
  
  Thanks to a recent upgrade in its segmentation technology, Retentics now can cluster customers into four to 50 different groups for "hyper-segmentation."

• [Scalability] To find product market fit

  

  
  Retentics targets a niche market overlooked by big SaaS-based analytics services by zeroing in on customer retention.
  
  The good sign is that demand for Retentics-like services is growing both at home and abroad, the Fridays Lab CEO said.
  
  “Competitors are entering the market, suggesting it is set to grow. The more market players, the better,” said Lim.
  
  After recruiting three US-based clients, Retentics aims to expand its presence in the US, the world’s biggest SaaS market by the number of companies.
  
  “If Retentics succeeds in the US where SaaS programs are prevalent, its success in Korea is almost guaranteed,” said Lim.
  
  SaaS-based platforms are cheaper and easier to operate because they do not require special engineers to install them. SaaS users can access various analytics tools with one click through monthly subscription fees.
  
  

  

  
  Fridays Lab has two global headquarters – one in San Jose, California and the other in Seoul. Lim will mainly stay in the US head office, while the remaining Korean executives will oversee the operation of the Seoul office.
  
  “A few Retentics-like analytics services exist in the US but I see great growth potential for our service there,” said Lim. “Now it is time to focus on one specialty to win the market instead of offering services covering a broader spectrum.”
  
  Retentics mainly targets e-commerce players, and it will continue to focus on that sector for a while.
  
  “Our priority is to find our product market fit, and we will focus on that for now,” said Lim. 
  
  Eventually, however, Fridays Lab wants to make Retentics a truly versatile data analytics tool that can be widely used in any industry and in any language, Lim added.

• [Revenue model] SaaS-based subscription service

  

  
  Retentics offers different subscription plans for its users. Fridays Lab will soon come up with updated plans.
  
  It costs about $10,000 on average per year to use Retentics, whereas it is about five times more expensive to use Amplitude, which analyzes all levels of the marketing funnel. 
  
  Fridays Lab does not disclose its financial information including revenue, saying that is confidential.
  
  It has so far won more than 20 local clients including Woodo, Washswat, aboutPet and Milk Touch in the retail sector, ranging from book sharing and laundry services to pet care and cosmetics.
  
  Korean food e-commerce operator Wooltari and organic feminine care product developer Rael in the US also use the Korea-made data analytics tool.

• [Challenge] Retention, retention, retention

  

  
  It is not hard for a SaaS company to find investors in the early stages, but whether it can continue to attract investment hinges on its ability to retain customers, a universal rule for online-based businesses.
  
  Retentics faces the same challenge to improve customer retention rates to prove its sustainability, said Lim.
  
  It is ideal to see an increase in customers even after the monthly recurring revenue (MRR) peaks. But that is not normally the case due to the increasing departure of clients after that stage, said Lim.
  
  “This is why it is important to find our product market fit (PMF), which is a process to prevent customer churn. This is every SaaS company’s challenge, and once we find our PMF, we will be eligible for Series A funding,” said Lim.
  
  

  

  
  To reduce customer attrition, Retentics plans to more seamlessly integrate all its services from data uploading to CRM marketing.
  
  Fridays Lab will also upgrade Retentics by adding more actionable solutions to improve customer retention, it said.

• [Funding] Series A in Q3 2024

  Like many startups, Fridays Lab also hopes to go public one day, but it is too early to consider an initial public offering, said Lim, adding that 2032 might be the year for an IPO.
  
  For now, the company aims to add more than 15 clients in the US and over 40 in Korea by the second quarter of 2024 and achieve an MRR of $100,000 in the third quarter of next year to tap Series A funding, Lim said.
  
  After receiving the 600 million won seed funding from Kakao Ventures in late 2021, it earned 580 million won from the Tech Incubator Program for Startups run by Korea’s Ministry of SME and Startups in May 2022.
  
  Four months later, the Retentics developer raised $1,160,000 from Primer Sazze Partners and Valon Capital in a pre-Series A funding round.
  
  

  

  
  Primer Sazze Partners and Valon Capital are US-based venture capital firms.
  
  Both VCs invested in the Korean data analytics startup on condition that Fridays Lab sets up a headquarters in the US,  anticipating that the American market has greater growth potential for the service, Lim said.
  
  Together with an undisclosed individual investor, the two VCs again injected $900,000 into Fridays Lab in a pre-Series A bridge funding round in June this year. 
  
  Since the seed funding, Fridays Lab has raised $3 million in total.
  
  The company will use the proceeds to upgrade its product and for operations.

• [Team building] Growing together

  

  
  The company has 14 employees including C-level executives, about two-thirds of which are developers. Its co-founder Jang left the company in May but will continue to serve as an external advisor, Lim said.
  
  Unlike large corporates, Fridays Lab is an early-stage startup run by young people, which allows its employees to test their abilities through various roles and duties.
  
  “I hope our staff members can grow with the company,” said Lim.
  
  Fridays Lab also awards stock options to all of its employees regardless of position.    
                                 
  This small but mighty startup hopes to turn a one-man enterprise into a unicorn in the AI era with Retentics.
  
  “We want to offer boundless services to our clients,” said Lim.
  
  

  

  
  The CEO is a young but seasoned businessman who started his own business after turning his obsession in magic into a business idea when he was still in high school.
  
  His entrepreneurship zeal never fizzled despite a few failed businesses that continued into his college years.
  
  Lim is sure that his latest invention is not a magic wand but a real problem fixer for other businesses.
  
  

  

  
  “Retentics aims to make advanced CRM marketing easy even for a one-person business,” Lim said.
  
  “Our goal is to ensure the democratization of data use by many companies regardless of their size or industry so they can keep ahead of their rivals.”