Thus, RFM analysis helps to establish strategies to increase the level of customer satisfaction and convert them into regular customers in order to increase e-commerce turnover.
We tell you how to perform an RFM analysis and how to establish these strategies.
What is RFM analysis?
RFM analysis is a segmentation model that identifies the best customers based on their spending habits . It is a customer segmentation technique that helps increase e-commerce sales .
It is a classification to better understand the value of different segments of a brand's customer base based on their behavior. The more you know about your customers, the better you can adapt your strategies to their needs and tastes.
It is therefore a matter of using customer data to develop strategies that encourage repeat purchases and increase spending per purchase . These strategies are aimed at offering customers what they need at any given time. Thanks to this personalized treatment, customers will neither have the need nor the temptation to change brands.
RFM analysis stands for Recency, Frequency, Monetary .
The RFM model analyses three concepts , which numerically classify customers on a scale of 1 to 5. The higher the number, the better the result. Thus, the best customers are those gambling data korea phone number who obtain the highest score according to the criteria:
Recency : How recent the customer’s purchase was. The more recent the purchase, the more likely a customer will remember the brand and purchase again.
Frequency : the frequency with which a purchase is made. Brands can anticipate demand and launch marketing messages and actions focused on building customer loyalty.
Monetary value : the amount the customer has spent on their purchases. Brands develop strategies to increase the value of each ticket.
In this way, the scale is established and the clients that provide the most value are identified.
Objectives of doing an RFM analysis
The main objective of performing an analysis with the RFM model is to increase revenue, but it also offers other benefits:
Create campaigns targeted to each segment
RFM analysis makes it easy to segment customers based on their value. This allows you to create specific campaigns for these different segments and adapt the messages. Because a customer who has made a purchase once, for whom the brand must remind them of its existence and encourage them to buy again, is not the same as another customer who is already a regular customer and for whom the brand, for example, establishes a system of promotions.
By using this customer segmentation, marketing departments can compare the benefits that a new customer represents for the brand and an existing one, and thus establish their budgets and sales strategies.
Knowing the dropout rate
It allows you to obtain data on how users interact with the e-commerce site and to know, for example, the site abandonment rate. In this way, brands can establish retention strategies.
Improve response rate
Segmenting customers by their characteristics makes it easier to create specific campaigns aimed at meeting the needs of each type.
Increase conversion rate
Having information about each customer and segmenting them by type will result in improvements that will translate into an increase in the conversion rate.
Integrate it into promotions and actions
RFM analysis is simpler than other formulas, so it will also be easier to integrate into other promotions.
The importance of customer segmentation and how to do it
We have seen how important it is to know the brand's customers well and how they behave.
It is the key to developing effective strategies and actions and adapting messages to the moment in time.
Because a customer visiting an e-commerce site for the first time does not need, want or desire the same thing as a returning user.
How to get that customer knowledge?
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