RFM stands for Recency, Frequency and Monetary Value and is a proven database marketing technique.
The goal of RFM Analysis is to segment customers based on their buying behavior:
- Recency is the number of days since the customer made their last purchase. A customer who purchased in the last month is more loyal than a customer who made their last order a year ago.
- Frequency is the number of orders the customer has made. A customer who has ordered 4 times this year is better than a customer who has only ordered once.
- Monetary Value is the total amount of money spent by the customer. A customer who has spent €1,000 with you is better than a customer who has spent only €50.
abcommerce will automatically give each subscriber a ranking between 1 and 4 for "R", "F" and "M". 1 means they are in the top 25% and 4 means they are in the bottom 25%.
So your best customers have "R=1" and "F=1" and "M=1". And your worst customers have "R=4" and "F=4" and "M=4".
abcommerce has the following automatic target groups available for you to target. And it also allows you target more than 1 group at a time, or to create your own target groups. For example, you could send a promotion email and/or SMS to all users who are "Lost" or "Almost Lost" to try and win them back to you.
|Best Customers||R1 / F1 / M1||These customers purchased most recently, and most frequently and spend the most with you|
|Loyal Customers||F1||These customers purchase most frequently so are your most loyal customers|
|Big Spenders||M1||These spend the most with you|
|New Spenders||141||These purchased recently but only purchased once under Frequency, but spent a lot with their first order|
|Loyal Joes / Janes||?14||These purchase regularly but have not spent much|
|Lost Customers||411||These used to purchase frequently from you, and also spent a lot with you, but have not purchased in a long time|
|Almost Lost||311||These customers will become Lost Customers soon|
|Splurgers||?41||These customers dont spend regularly with you but when they do, they spend a lot|
|Deadbeats||444||These are your worst customers|