Using RFM Analysis for Targeting Specific Customers

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.