Use RFM segmentation in ecommerce

Use RFM segmentation in ecommerce

1. Run an RFM analysis using your CRM's built-in functionality or a third-party app or plugin.

Many CRM platforms have a standard RFM analysis tool available. If you don’t have access to one, check out third party apps and plugins like Barilliance, Clevertap, Optimove, or Growmatik for WooCommerce.

2. If you are doing an RFM analysis manually, export your ecommerce platform's customer data. Export each field as a separate column: Customer name, First order date, Last order date, Total number of orders, and Total customer sales.

3. Establish an internal RFM score for recency, frequency, and monetary value, using a scale of 1-5 or 1-10.

A high number indicates recent activity, repeat visits, and lots of revenue.

4. Apply the RFM score to your customer data, ranking customers for each of the three columns. Add recency, frequency, and monetary value scores to get a total score for each customer.

5. Use the RFM scores to create segments that identify each customer’s trends, such as loyal customers who score high in all areas, potential loyalists who have a high spend but not a lot of history, and brand-new users who may need nurturing.

6. Create high-touch marketing and customer service strategies for highly loyal customers who deserve more personal attention and superior customer support.

7. Create personalized reactivation marketing campaigns for at-risk customers who scored high on sales and frequency, but scored low on recency.

8. Nurture new customers who scored low on frequency but high on overall RFM, using marketing techniques like personalized onboarding or special discounts.

9. Upsell loyal but low-spending customers who scored high on frequency and recency, but low on monetary value, with incentives like free shipping if they order a certain amount.

10. Create additional incentives and targeted messaging on any additional RFM segments you make, getting as granular as you need to with your RFM segments.