Based on purchase history and behavior, customers are automatically segmented using the RFM model, allowing you to target each segment in the most effective way.
What is RFM?
RFM is a way of analyzing customer value according to 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 who 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 the most recently, visit the most often, and spend the most |
Reward them and introduce to 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, visit often, visited somewhat recently |
Promote expensive products, and incentives to come in (such as limited time offers) |
|
Big Spenders At Risk |
Spent a lot, visit 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 |
|
New |
Members of 2 months membership age |
Reward them for joining the program and bring them back after their first purchase. |
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: The RFM tagging runs every day, 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.