What is RFM?
With RFM, you divide up your customer base based on customer value. You look at three aspects for this::
- Recency: How recently has a profile made a purchase?
- Frequency: How often does a profile make a purchase?
- Monetary: How much money does the profile spend?
The answer to the above questions translates into a score in the range 1 to 5. Here, 1 is the lowest, and 5 is the highest. An RFM score is made up of three consecutive digits, always in the order Recency > Frequency > Monetary.
In this blog article, we give you five examples of successful campaigns based on RFM. Want to know more about RFM? You can read all about it in our blog on conducting an RFM analysis.
Example 1: approaching promising customers
Promising customers are customers who have recently made a (reasonably) large purchase from you. However, they only placed one order. You naturally want to persuade these promising customers to place more orders with you. Because they have already placed a relatively high order with you at least once, there is a significant chance that they will make another high purchase with you.
To turn promising customers into returning customers, it is important to develop the relationship with this group. How do you develop a strong customer relationship? Some examples:
- Set up a cross sell campaign. This will show what else you have to offer.
- Tell more about yourself. Send e-mails with behind-the-scenes images and introduce yourself and your colleagues. In short: show the faces behind the webshop.
- Share valuable and unique knowledge with your customers. For instance, send styling tips, instruction videos or step-by-step plans. When you share knowledge without expecting anything in return, you respond to your customer's reciprocity and he will be more inclined to place a new order with you.
Example 2: approaching inactive buyers
The inactive buyers group are customers who have placed few orders with you, with a small order amount. The inactive buyers have already been introduced to your shop. Now it's time to persuade them to make more purchases from you.
You approach this group best with time-based campaigns. You want to create urgency so that inactive buyers are more likely to place a new order with you. How do you create this urgency?
- Set up a time-based campaign with a temporary offer. Make the urgency visual by putting a countdown timer in your emails or adjust your language. For example, "The previous offer sold out very quickly, take your chances!" works very well to create urgency. Tip: keep your promotion approachable. A discount code that is temporarily valid is fine, but do not attach any heavy conditions. Keep the minimum amount to spend low, for instance. After all, the goal is to receive more purchases from inactive buyers and not necessarily to increase the monetary value.
- Set up a profile enrichment campaign for the inactive customers. This will give you more insight into the interests of these customers, and you can respond to them perfectly.
Example 3: targeting customers with many small purchases
The name of this customer group says it all: these customers have already made many purchases from you, but the value of these purchases remains low. You want to persuade this group to also make large purchases with you, so that the monetary score increases.
For the group of customers with many small purchases, it is important to gain trust. After all, you don't make a big purchase overnight. In addition, you want to motivate customers to spend more money with you. You can combine these two things as follows, in order to win larger purchases:
- Send customers with many small purchases an invitation to join a VIP club. Then give VIP club members extra benefits, such as 10% discount on any spending above €100.
- Bet on sympathy and celebrate you and your customer's milestones. For example, celebrate the anniversary of your customer's very first purchase and send an e-mail on his or her birthday.
- Social proof can convince these customers to make bigger purchases from you. Add reviews from existing customers to your emails and watch the confidence of small buyers soar!
💡 An example of an email automation for customers with many small purchases can be found in our help article.
Example 4: approaching customers that cannot be lost
These customers have often ordered a high amount from you in the past, but have been quiet for a while. Of course, you don't want to lose this group of customers. It's up to you to persuade them to place a new order with you.
The not-to-be-lost customers need a reminder. Maybe they have forgotten about you, or found another webshop to place their orders. Show that only you can provide the added value they need.
- Social proof can persuade customers to come back to you. Add (product) reviews to e-mails. Or set up a campaign where you have an existing customer speak to you every week.
- An invitation to join a VIP club also works for those customers who cannot be lost. Give VIP customers extra benefits, such as ordering without paying shipping costs or 5% discount on every new order.
- Having trouble identifying what the not-to-lose customers need? Ask! Set up a campaign for profile enrichment. Then send emails based on these interests.
Example 5: returning buyers
Returning buyers have ordered from you before. However, this group lacks activity and value. Show returning buyers what you have to offer!
How to do that? A few examples:
- Send a cross- or upsell campaign after a purchase. Match the products in the e-mail to the customer's previous purchase (or purchases). This shows you know him or her, and perfectly match your customer's needs.
- Give returning buyers special treatment. Share a (high) discount code with this group, valid for a short time. Capitalize on human reciprocity with this tactic.
- Engage in a conversation with your customer. What is the reason the customer does not place an order with you more often? Is he missing products in your range, or is the service inadequate? Tip: Embed a Google Form in a landing page of Reloadify to ask your customer's opinion.
Extensive segmentation with RFM
In this blog, we have provided some examples of campaigns based on RFM. Be inspired by these examples, but find out for yourself which RFM scores are most interesting for your webshop. Tip: always check how many customers have a certain score. All scores are calculated based on your webshop data. Thus, the Monetary value can be disconnected when a handful of customers (or even one customer) has a much higher order value than average. Fortunately, in Reloadify you can always see how many customers meet set conditions. Very convenient!
