{"id":1222,"date":"2021-12-22T08:32:20","date_gmt":"2021-12-22T01:32:20","guid":{"rendered":"https:\/\/mintea.blog\/?p=1222"},"modified":"2021-12-26T17:11:38","modified_gmt":"2021-12-26T10:11:38","slug":"1222","status":"publish","type":"post","link":"https:\/\/mintea.blog\/?p=1222","title":{"rendered":"How to Identify Your Best Customers Using RFM Segmentation"},"content":{"rendered":"<p><strong>How to Identify Your Best Customers Using RFM Segmentation<\/strong><\/p>\n<p>RFM (Recency Frequency Monetary) analysis or RFM segmentation is an effective customer segmentation technique to improve your marketing.<\/p>\n<p><strong>Instead of reaching out to 100% of your audience, target only specific customer segments that can prove beneficial for your business in future.<\/strong><\/p>\n<p>Thus, RFM analysis will help you strengthen your relationship marketing and increase customer loyalty.<\/p>\n<p><strong>What does RFM stand for?<\/strong><\/p>\n<ul>\n<li><strong>Recency (R) \u2013<\/strong>\u00a0How many days ago customer made a purchase? Deduct most recent purchase date from today to calculate the recency value. 1 day ago? 14 days ago? 500 days ago?<\/li>\n<li><strong>Frequency (F) \u2013<\/strong>\u00a0How many times has the customer purchased from our store? For example, if someone placed 10 orders over a period of time, their frequency is 10.<\/li>\n<li><strong>Monetary (M)\u00a0<\/strong>\u2013 How many $$ (or whatever is your currency of calculation) has this customer spent? Simply total up the money from all transactions to get the M value.<\/li>\n<\/ul>\n<p>Customers with the\u00a0most recent purchase, more transactions and spending more money are assigned higher values.<\/p>\n<p><strong>Why\u00a0RFM\u00a0segmentation\u00a0is useful?<\/strong><\/p>\n<p>Using RFM segments, you get to know:<\/p>\n<ul>\n<li>Who are your\u00a0best customers?<\/li>\n<li>Which customers are at the verge of churning?<\/li>\n<li>Who has the potential to be converted in more profitable customers?<\/li>\n<li>Which customers must be retained?<\/li>\n<\/ul>\n<p>and many more\u2026<\/p>\n<p>Based on your customers purchasing behaviour (RFM parameters),\u00a0<a href=\"https:\/\/www.putler.com\/\"><strong>Putler<\/strong><\/a>\u00a0automatically divides your customer database into\u00a0<strong>11 different customer segments\u00a0<\/strong>as shown in the image below. Each segment is completely different from the other.<\/p>\n<p>For example, out of 10000 customers, you might have only 120 \u201c<strong>Champion<\/strong>\u201d (best) customers while your \u201c<strong>Customers At Risk<\/strong>\u201d count may be 1370.<\/p>\n<p><img decoding=\"async\" class=\"wp-image-1231\" src=\"https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-segmentation-2.png\" alt=\"RFM segmentation\" \/><\/p>\n<p>The following table explains each customer segment and what\u00a0<strong>action<\/strong>\u00a0you can take for each.<\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Customer Segment<\/strong><\/td>\n<td><strong>Activity<\/strong><\/td>\n<td><strong>Actionable Tip<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Champions<\/td>\n<td>Bought recently, buy often and spend the most!<\/td>\n<td>Reward them. Can be early adopters for new products. Will promote your brand.<\/td>\n<\/tr>\n<tr>\n<td>Loyal Customers<\/td>\n<td>Spend good money with us often. Responsive to promotions.<\/td>\n<td>Upsell higher value products. Ask for reviews. Engage them.<\/td>\n<\/tr>\n<tr>\n<td>Potential Loyalist<\/td>\n<td>Recent customers, but spent a good amount and bought more than once.<\/td>\n<td>Offer membership \/ loyalty program, recommend other products.<\/td>\n<\/tr>\n<tr>\n<td>Recent Customers<\/td>\n<td>Bought most recently, but not often.<\/td>\n<td>Provide onboarding support, give them early success, start building relationship.<\/td>\n<\/tr>\n<tr>\n<td>Promising<\/td>\n<td>Recent shoppers, but haven\u2019t spent much.<\/td>\n<td>Create brand awareness, offer free trials<\/td>\n<\/tr>\n<tr>\n<td>Customers Needing Attention<\/td>\n<td>Above average recency, frequency and monetary values. May not have bought very recently though.<\/td>\n<td>Make limited time offers, Recommend based on past purchases. Reactivate them.<\/td>\n<\/tr>\n<tr>\n<td>About To Sleep<\/td>\n<td>Below average recency, frequency and monetary values. Will lose them if not reactivated.<\/td>\n<td>Share valuable resources, recommend popular products \/ renewals at discount, reconnect with them.<\/td>\n<\/tr>\n<tr>\n<td>At Risk<\/td>\n<td>Spent big money and purchased often. But long time ago. Need to bring them back!<\/td>\n<td>Send personalized emails to reconnect, offer renewals, provide helpful resources.<\/td>\n<\/tr>\n<tr>\n<td>Can\u2019t Lose Them<\/td>\n<td>Made biggest purchases, and often. But haven\u2019t returned for a long time.<\/td>\n<td>Win them back via renewals or newer products, don\u2019t lose them to competition, talk to them.<\/td>\n<\/tr>\n<tr>\n<td>Hibernating<\/td>\n<td>Last purchase was long back, low spenders and bought seldomly.<\/td>\n<td>Offer other relevant products and special discounts. Recreate brand value.<\/td>\n<\/tr>\n<tr>\n<td>Lost<\/td>\n<td>Lowest recency, frequency and monetary scores (RFM score).<\/td>\n<td>Revive interest with reach out campaign, ignore otherwise.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><strong>How to analyse\u00a0customers in each segment?<\/strong><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" width=\"1265\" height=\"559\" class=\"wp-image-1232\" src=\"https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-grid-2.png\" alt=\"RFM-grid\" srcset=\"https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-grid-2.png 1265w, https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-grid-2-300x133.png 300w, https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-grid-2-1024x453.png 1024w, https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-grid-2-768x339.png 768w\" sizes=\"auto, (max-width: 1265px) 100vw, 1265px\" \/><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>If you are an\u00a0<strong>existing<\/strong>\u00a0Putler user, just\u00a0<a href=\"https:\/\/web.putler.com\/#!\/login\"><strong>sign-in<\/strong><\/a>\u00a0to your account, select \u201c<strong>Customers<\/strong>\u201d from the drop-down at the extreme left on top.<\/li>\n<li>If your are a\u00a0<strong>new user<\/strong>,\u00a0<a href=\"https:\/\/web.putler.com\/#!\/signup\"><strong>sign-up<\/strong><\/a>\u00a0for Putler, add account ( payment gateway \/ shopping cart) and you will land on\u00a0Putler\u2019s overall dashboard. Then select \u201c<strong>Customers<\/strong>\u201d from the drop-down at the extreme left on top.<\/li>\n<li>After selecting the customers dashboard, you will see a colourful table on the right hand side as shown in the above image.\u00a0<strong>That\u2019s the RFM grid.<\/strong><\/li>\n<li>Select any customer segment and corresponding details of each customer will be loaded below.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" width=\"1261\" height=\"496\" class=\"wp-image-1233\" src=\"https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-segment-2.png\" alt=\"RFM-segment\" srcset=\"https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-segment-2.png 1261w, https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-segment-2-300x118.png 300w, https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-segment-2-1024x403.png 1024w, https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/rfm-segment-2-768x302.png 768w\" sizes=\"auto, (max-width: 1261px) 100vw, 1261px\" \/><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>For example: In the above image, if you select \u201c<strong>Potential Loyalist<\/strong>\u201c, it will display all the customers who belong to that potential loyalist segment.<\/li>\n<li>Below the table, you will observe a section called as \u201c<strong>Customer Cards\u201d<\/strong>\u00a0along with a \u201c<strong>Save<\/strong>\u201d icon.<\/li>\n<li>Click on the Save icon and it will show you two options as shown in the image below: \u201c<strong>Export as CSV\u201d<\/strong>\u00a0and \u201c<strong>Export to MailChimp\u201d<\/strong>.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"196\" class=\"wp-image-1234\" src=\"https:\/\/mintea.blog\/wp-content\/uploads\/2021\/12\/export-list-2.png\" alt=\"export-list\" \/><\/p>\n<ul>\n<li>Export the customer list as CSV file for future reference or export list to MailChimp (if you have a MailChimp account).<\/li>\n<li>Once you export CSV file, you will see\u00a0<strong>complete details<\/strong>\u00a0of each of your customer \u2013 Name, email id, country, address, contact number, transactions.<\/li>\n<li>Using these details, you can prepare\u00a0<strong>special email message<\/strong>\u00a0for only these segment and then send relevant email campaigns. \u00a0Or you can talk to them personally to nurture your relationship .<\/li>\n<li>Here, the segment selected is of potential loyalist. So, you can offer them a special membership or a loyalty program via email or on phone.<\/li>\n<li>Similarly, you can select any other\u00a0<a href=\"https:\/\/www.putler.com\/customer-segmentation\/\">customer segment<\/a>\u00a0and send relevant emails only to those customers.<\/li>\n<\/ul>\n<p>Want to know in and out\u00a0about RFM? Calculations, case-studies, scoring, pros &amp; cons, etc?\u00a0<a href=\"https:\/\/mintea.blog\/?p=1214\"><strong>Here\u2019s a complete walkthrough<\/strong><\/a><strong>.<\/strong><\/p>\n<p>Source: Plutter<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How to Identify Your Best Customers Using RFM Segmentation RFM (Recency Frequency Monetary) analysis or RFM segmentation is an effective customer segmentation technique to improve your marketing. Instead of reaching out to 100% of your audience, target only specific customer segments that can prove beneficial for your business in future. Thus, RFM analysis will help &hellip; <a href=\"https:\/\/mintea.blog\/?p=1222\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">How to Identify Your Best Customers Using RFM Segmentation<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":1228,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[32,62,55,56,26,54,57],"class_list":["post-1222","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bookmarked-articles","tag-analytic","tag-crm","tag-customer-analytic","tag-customer-lifecycle","tag-data","tag-data-mining","tag-rfm"],"_links":{"self":[{"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/posts\/1222","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mintea.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1222"}],"version-history":[{"count":5,"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/posts\/1222\/revisions"}],"predecessor-version":[{"id":1241,"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/posts\/1222\/revisions\/1241"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mintea.blog\/index.php?rest_route=\/wp\/v2\/media\/1228"}],"wp:attachment":[{"href":"https:\/\/mintea.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mintea.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mintea.blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}