Use rfm analysis to segment your contact base
Posted: Tue Dec 03, 2024 10:44 am
Knowing your audience means being able to offer exactly what they are looking for at that moment to meet their desires and needs. And this is important for any business. Segmenting your contact base allows you to maintain personalized and strategic communication with your customers, building a relationship of loyalty.
Read more:
>> How to deal with 5 subscriber profiles that every email marketing has >> How email marketing can help your franchise network
And to make this segmentation even more effective, RFM analysis comes into play, an acronym in English that refers to Recency, Frequency and Monetary Value.
Recency: This is when a customer last made their purchase. Recent customers are generally more engaged than those who last purchased a while ago.
Frequency: This is the total number of times a customer has purchased from your brand in a given period. A customer who purchases from you six times in eight months is likely to be more valuable than a customer who only purchases once.
Monetary Value: This is the total amount of money a customer spends within a given period of time. In this view, a customer who spends more is worth more to your business than a customer who only buys low-cost products.
Content
How to segment your contact base with RFM?
Email examples for each profile
1. The best customers
2. The most loyal customers
3. The best paying customers
Why is RFM analysis important?
Resource saving
Customer retention
Focus on customer acquisition
How to segment your contact base with RFM?
To get started, the first step is to understand that the RFM model assigns a value to each customer based on how they score in each of the categories we listed above. These nursing homes email list categories are combined to form an RFM score. From this definition, you can then communicate with these customer segments separately, with personalized offers and messages.
Each profile should receive a score based on a scale appropriate to your business:
From 1 to 5 if you have more than 200 thousand customers;
From 1 to 4 if you have 30 to 200 thousand customers;
1 to 3 if you have less than 30 thousand customers.
Email examples for each profile
Below, we simulate an RFM scoring scale for a medium-sized business, which has up to 200,000 customers . In addition, we have gathered some tips on how you can communicate with each of the profiles more accurately. Let's check it out!
1. The best customers
These are those who are highly engaged, who have purchased in a more recent period, who buy more frequently and who generate more revenue.
How to reach them: Focus on loyalty programs and new product launches. These customers have proven to be more willing to pay, so you don’t need to offer discounts to generate upsells. Instead, focus on value-added offers, such as product recommendations based on past purchases.
See also:
>> Who are and how to reward your VIP customers
2. The most loyal customers
These are the people who buy most frequently from your store. The value of a single purchase will not always be high, but since the volume of purchases is considerable, they also contribute positively to the results of your business.
How to reach them: Just like in the example above, loyalty programs are also effective for these repeat visitors. But in this case, it’s still important to consider rewarding these customers with free shipping or other similar benefits.
3. The best paying customers
These are the ones who generate the most revenue for your store. They may not be among the last to buy, nor among those who buy the most often, but the value of each purchase from them is enough to positively impact your business results.
How to communicate with them: It is true that these customers already demonstrate a high willingness to pay, so you do not need to waste your message offering discounts to complement their purchases. However, it is important to consider special offers for them, with subscriptions, luxury products and high-value cross-sales.
Also check out:
>> Learn how to increase your e-commerce average ticket
Why is RFM analysis important?
It is common to analyze data to segment the contact base , such as age, gender, interests, browsing behavior, among other audience information to ensure the delivery of the right content to each audience. But, when you apply RFM analysis, segmentation becomes much more precise in relation to consumer behavior. And this is just one of the main advantages of RFM. Let's take a look at some of the others?
Resource saving
Instead of spending hours aggregating data and preparing spreadsheets, you can focus on analyzing the value of each customer profile according to RFM analysis. This way, you can extract valuable insights to optimize strategies and increase the chances of building relationships with your customers.
Customer retention
And speaking of building relationships with customers, customer loyalty is essential to ensuring good sales results . After all, when you know who your most valuable customers are, you can focus your retention efforts on keeping them satisfied.
It is true that some customers will buy a cheap item from your e-commerce site once and disappear, never to return. On the other hand, other customers will buy (almost) everything you offer and praise your company to all their friends and family. In this sense, RFM analysis is a technique that helps a lot in segmenting the contact base into low, medium and high value.
Read more:
>> How to deal with 5 subscriber profiles that every email marketing has >> How email marketing can help your franchise network
And to make this segmentation even more effective, RFM analysis comes into play, an acronym in English that refers to Recency, Frequency and Monetary Value.
Recency: This is when a customer last made their purchase. Recent customers are generally more engaged than those who last purchased a while ago.
Frequency: This is the total number of times a customer has purchased from your brand in a given period. A customer who purchases from you six times in eight months is likely to be more valuable than a customer who only purchases once.
Monetary Value: This is the total amount of money a customer spends within a given period of time. In this view, a customer who spends more is worth more to your business than a customer who only buys low-cost products.
Content
How to segment your contact base with RFM?
Email examples for each profile
1. The best customers
2. The most loyal customers
3. The best paying customers
Why is RFM analysis important?
Resource saving
Customer retention
Focus on customer acquisition
How to segment your contact base with RFM?
To get started, the first step is to understand that the RFM model assigns a value to each customer based on how they score in each of the categories we listed above. These nursing homes email list categories are combined to form an RFM score. From this definition, you can then communicate with these customer segments separately, with personalized offers and messages.
Each profile should receive a score based on a scale appropriate to your business:
From 1 to 5 if you have more than 200 thousand customers;
From 1 to 4 if you have 30 to 200 thousand customers;
1 to 3 if you have less than 30 thousand customers.
Email examples for each profile
Below, we simulate an RFM scoring scale for a medium-sized business, which has up to 200,000 customers . In addition, we have gathered some tips on how you can communicate with each of the profiles more accurately. Let's check it out!
1. The best customers
These are those who are highly engaged, who have purchased in a more recent period, who buy more frequently and who generate more revenue.
How to reach them: Focus on loyalty programs and new product launches. These customers have proven to be more willing to pay, so you don’t need to offer discounts to generate upsells. Instead, focus on value-added offers, such as product recommendations based on past purchases.
See also:
>> Who are and how to reward your VIP customers
2. The most loyal customers
These are the people who buy most frequently from your store. The value of a single purchase will not always be high, but since the volume of purchases is considerable, they also contribute positively to the results of your business.
How to reach them: Just like in the example above, loyalty programs are also effective for these repeat visitors. But in this case, it’s still important to consider rewarding these customers with free shipping or other similar benefits.
3. The best paying customers
These are the ones who generate the most revenue for your store. They may not be among the last to buy, nor among those who buy the most often, but the value of each purchase from them is enough to positively impact your business results.
How to communicate with them: It is true that these customers already demonstrate a high willingness to pay, so you do not need to waste your message offering discounts to complement their purchases. However, it is important to consider special offers for them, with subscriptions, luxury products and high-value cross-sales.
Also check out:
>> Learn how to increase your e-commerce average ticket
Why is RFM analysis important?
It is common to analyze data to segment the contact base , such as age, gender, interests, browsing behavior, among other audience information to ensure the delivery of the right content to each audience. But, when you apply RFM analysis, segmentation becomes much more precise in relation to consumer behavior. And this is just one of the main advantages of RFM. Let's take a look at some of the others?
Resource saving
Instead of spending hours aggregating data and preparing spreadsheets, you can focus on analyzing the value of each customer profile according to RFM analysis. This way, you can extract valuable insights to optimize strategies and increase the chances of building relationships with your customers.
Customer retention
And speaking of building relationships with customers, customer loyalty is essential to ensuring good sales results . After all, when you know who your most valuable customers are, you can focus your retention efforts on keeping them satisfied.
It is true that some customers will buy a cheap item from your e-commerce site once and disappear, never to return. On the other hand, other customers will buy (almost) everything you offer and praise your company to all their friends and family. In this sense, RFM analysis is a technique that helps a lot in segmenting the contact base into low, medium and high value.