Do you know which customers are valuable for your business? Do you know which you need to engage to create effective marketing strategy? 

Customer segmentation is a tenet of modern marketing.

One of the best ways to gauge the value of a customer is to do RFM analysis. 

5 ways to use RFM for a better and more effective marketing strategy:

1. Know your best customers.  Identify your champions who buy a lot, spend the most and buy frequently. 

2. Low-hanging fruits - find your loyalist.

3. Target the right segment with personalized messages.

4. Create tiered marketing communication.
Your Lot customers might not be best group to create expensive marketing strategy, choose your Can't Loose group to create aggressive campaign as they brought a lot of monetary value to your business but for some reason weren't making any purchases for more then a month.

5. Use RFM outside of email marketing.
RFM can be used not only for email marketing, Use those groups for social media using edrone Facebook Ad add-on to engage them on Facebook.

Retention vs. acquisition  

I’ve recently discovered some statistics that prove how important is to create a loyalty system and why you should focus on engaging with your promoters by giving them a special treatment.

According to RJ Metrics, after 24 months, 50% of the revenue comes from returning visitors. Use RFM to identify High LTV customers.

  • High RFM customers (Champions, Loyal Customers) — Make them aware of your more high-end products and services. Give them unique discounts and high-value rewards for being such active supporters of your business. Encourage them to refer others and reward them for doing so — this band of people make for great customer advocates. For example, some retailers automatically offer free shipping and other perks to their best online customers.
  • Medium RFM customers (Potential Loyalist, New Customers, Promising Need Attention, At Risk, Can’t Lose Them) — This segment includes your newest customers or subscribers. Make them aware of particular sales and promotions that you’re running. This would be your “standard” email marketing, combining awareness, value-add, and other messaging. Give them a good first impression of your company with welcome offers, product-usage tips or other information that newbies would find helpful.
  • Low RFM customers (Hibernating, Lost, Visitors ) — These are the people who don’t spend much or buy often from your business. You might want to offer free trial periods, one-off discounts, and other ways to get them to try out your services. You’re trying to encourage the people in this band to become medium RFM customers. As in direct marketing, your least-engaged recipients simply may not be worth mailing to. But in email marketing, they may be great candidates for a re-opt-in campaign. Double-check whether they still want to hear from you, and remove them from your list if they don’t. Visitors are not part of RFM analysis however activities from Low RFM customers can apply to them. 

Below are examples of actions dependent of the segment. 

Example 1

Segment:
Champions 

Communication type:
Early tester / New collection
VIP Customer
Only for you.
Fall in love with us ...

  • No discounts

Goal:

Keep those customers active, engage them frequently. Do not allow them to hibernate. 

Example 2

Segment:
Can’t lose them

Communication type:
We are changing for YOU
You are important for us
Check out our new things 

  • No discounts

Goal: 

Active this group of customers, redirect them back to your website. Move them to Champions or Loyal Customers.

Example 3

Segment:
Hibernating

Communication type:
Aggressive communication
Omnichannel marketing
Facebook, SMS, Email
Medium discounts
Promotions

Goal:
Reactive customers in this segment.  Move them to Potential Loyalist.

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