Retention Science, which sifts through big data to help its retail clients better target existing customers, decided to turn its attention inward and assess how its data collection methods could help expand its own customer base.

As a result, the Santa Monica marketing firm last month added clients outside its traditional realm of retailers: TVG, an online horse-betting company in West Los Angeles, and Pluto.TV, a streaming video service in West Hollywood.

Jerry Jao, Retention Science founder and chief executive, said that as the two-year-old company established its footing with traditional and e-commerce retailers such as Santa Monica’s Honest Co. and Dollar Shave Club in Venice, it started to examine how its service could help other industries.

“These are sort of our baby steps in showing that we’re collaborating with other L.A. companies,” said Jao, “and trying to figure out how we can make our solutions expand beyond our existing verticals … and see if there’s a long-term and bigger opportunity.”

Retention Science recently pulled in $7 million in a Series A round, bringing its total capital raised to $9 million. Upfront Ventures led the latest financing round with support from Baroda Ventures, Forerunner Ventures and Mohr Davidow Ventures, with a number of angel investors joining.

Steven Mednick, associate professor of clinical entrepreneurship at USC’s Marshall School of Business, said the company’s decision to expand its client base should have been expected after the latest investment.

“Investors want to put the money to work,” he said. “And so the question becomes, from a strategic standpoint, do we continue working with our current markets … or do we start looking at adjacent markets that have similar problems?”

Big data

Retention Science launched in 2012 after it went through Santa Monica tech accelerator MuckerLab.

The company, which is planning to add to its staff of 25, tracks and analyzes consumer data by latching its software to client websites. It combines the information it gleans there with additional data purchased from information services company Experian of Dublin, Ireland.

Retention also tracks purchase activity, time spent on a retailer’s website and the frequency at which a customer opens a retailer’s email.

Jao said an analysis of the resulting information allows it to make recommendations to clients on how to better engage shoppers. Those engagements can include customized promotions or a decision to send newsletters in the morning instead of afternoon for certain customers.

“We kind of brand ourselves as a predictive marketing platform,” said Jao. “There’s a lot of information about consumers. We can assess that you might be experiencing certain lifetime experiences based on what you buy.”

The company now has 24 clients, about half of which are big-box retailers, though Jao said he could not disclose names.

Its clients pay about $100,000 a year for the monthly software subscription service.

The price might be steep, but he said targeting existing customers offers a greater return than spending millions on advertising campaigns to attract new ones.

“With new customers, you’re blindly reaching out to them,” he said. “You don’t always know you’re going to get a return; (with) existing customers you know they’ve purchased before and they’re more familiar with your brand.”

Expanding market

Selling those services to nonretail businesses would put Retention Science into a much larger competitive pool.

Data analytics firm Sailthru Inc. of New York is expected to reach $50 million in revenue in the next two years, according to co-founder and Chief Technology Officer Ian White. Other big players in the personalized marketing industry is Indiana firm ExactTarget, which was acquired by Salesforce last year for $2.5 billion, and Responsys of San Francisco, bought last year for $1.5 billion by Oracle.

In addition, entertainment companies are increasingly looking to tap those analytics as their landscape gets more competitive.

Tom Ryan, co-founder and chief executive of Pluto.TV, said the startup hired Retention Science in order to use its technology to help offer targeted, personalized video recommendations to its users.

“We believe retention communications require customization to the individual user,” Ryan said.