Use RFM Customer Segments

Based on purchase history and behavior, customers are automatically segmented using to the RFM model—allowing you to target each segment in the most effective way.

What is RFM?

RFM is a method of analyzing customer value using the following factors:

  • Recency—how recently they visited
  • Frequency—how often they visit
  • Monetary—how much they spend

Customers are automatically assigned to a segment based on a score they receive in each of these areas. Segments are not necessarily levels—for example, you can have big spenders that haven’t purchased in a while, or members that come often but don’t necessarily spend a lot.

Customer Segments

The following table provides an overview of each segment and tips for how to target them:

 

Segment

Description

Targeting Tip

Champion

Best customers—visited most recently, most often, and spend the most

Reward them and introduce new products

Loyal

Visited recently and visit often, regardless of how much they spend

Upsell more expensive products and give incentives related to spending thresholds to increase spend

Almost Loyal

Medium-high frequency, low-medium recency, not big spenders

Engage them with special limited time offers and tailored offers based on purchase history

Occasional

Visited recently or somewhat recently, but not often

Increase loyalty incentives, give limited time offers, and bonus incentives (like bonus punches/points)

Big Spenders

Spent a lot, visted often, somewhat recently

Promote expensive products, and incentives to come in (such as limited time offers)

Big Spenders At Risk

Spent a lot, visited often, but didn’t visit recently

Bring them back using new product launches, strong price incentives and other win-back campaigns- and follow up!

Almost Lost

Medium/low visit frequency, haven’t visited in a while

Reach out with personalized communications through various channels

Lost

Didn’t visit in the last 13 months

Reconnect using win back campaigns, or ignore

 

Target Segments

Each customer is assigned to one of the segments above, which is reflected as a member tag. To target a segment, add the relevant member tag to the filter, benefit condition or automation condition.

 

The tag format is: *Behavior|RFM|Segment* , where Segment is the name in the table above.
For example, the tag for the Champion segment is *Behavior|RFM|Champion*

 

Note: At the beginning of each month, the customers are automatically segmented and tagged based on the purchase data over the previous 13 months. Therefore, the customer can be assigned to a new segment based on their latest purchase history.

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