RFM Segments
Learn about RFM segmentation
- What is segmentation?
- Meaning of RFM
- RFM segments in Sellkit
- Champions
- Loyal
- Potential Loyalist
- New Customers
- Promising
- Customers Needing attention
- About to Sleep
- Cannot lose them
- At-Risk
- Hibernating Customers
- Lost Customers
- Why using RFM Segments
What is segmentation?
Segmentation is splitting up customers into groups based on similar attributes or behavior. With customer segmentation, you can serve personalized content to the right people.
Meaning of RFM
RFM is a criterion that includes the recency, frequency, and monetary value of customers’ purchases. To rank and score customer segments, RFM value is calculated based on these metrics:
- Recency: defines how recent the customer’s last purchase was.
- Frequency: indicates how often customers make a purchase.
- Monetary: represents total money a customer had spent during purchases.
RFM segments in Sellkit
“RFM segments” is a condition that you can use it with your funnels, discounts, coupons, and also your smart notices. Sellkit uses RFM scores to provide the following segments automatically:
Champions
Bought recently, ordered often, and spent the most. These customers are responsible for a big share of your revenue. So, put a lot of effort into keeping them happy.
Loyal
They order regularly. Responsive to promotions. These are very active and therefore are valued customers.
Potential Loyalist
These customers already bought from you more than once, but the size of their basket was not too big.
New Customers
These customers bought from you relatively recently for average or below-average price and they have not been frequent customers – possibly this is their first purchase from your website.
Promising
These customers spend frequently and a good amount. But the last purchase was a long time ago.
Customers Needing attention
Above-average customer values whose last purchase happened in a relatively long time.
About to Sleep
Below average recency, frequency and monetary values. Will lose them if not reactivated.
Cannot lose them
Who used to visit and purchase quite often, but haven’t been visiting recently. The customer value of the members of this segment is above average but they have not made a purchase recently.
At-Risk
They spent a lot of money and purchased often but a long time ago. You need to bring them back!
Hibernating Customers
The last purchase was long back, with low spenders and a low number of orders. Do not overspend on advertising for this group, as the return on your investment is not likely to be positive.
Lost Customers
Made their last purchase a long time ago and didn’t engage recently at all. Do not waste resources on them as they are unlikely to come back.
Why using RFM Segments
RFM segmentation makes it easy to create an effective marketing campaign by targeting those who most likely welcome your content. You can use these segments to boost and improve:
- Conversion rate
- Customer loyalty
- Customer retention
- Customer lifetime value
What’s Next?
How to create coupons only for your loyal customers