📊RFM Segment Analyses
Recency, Frequency, Monetary Value (RFM):
Definition
RFM, also referred to as RFM analysis, is a customer segmentation and behavioural targeting technique used by businesses to rank and categorise customers based on the recency, frequency, and monetary value of their transactions. This approach helps marketers and business owners identify their target audience, allowing for more efficient use of marketing budgets.
RFM assigns scores to customers based on three key factors:
Recency: Recency measures how recently a customer made their last purchase. Customers who have made a purchase within the last few weeks are more likely to have your product and brand fresh in their minds, increasing the likelihood of a repeat purchase. The measurement of recency can be adjusted based on your business needs. For instance, some businesses, like car dealerships, may not expect frequent purchases, with a single customer potentially making a purchase only once every several years.
Frequency: Frequency assesses how often a customer makes purchases, helping to identify your repeat customers. Frequent purchases within a specific timeframe indicate a high likelihood that these customers will continue shopping with your brand after their initial purchase.
Monetary Value: Monetary value indicates how much a customer spends over a given period. This metric is crucial for understanding consumer behaviour. For example, customers who generate high monetary value might not purchase as frequently but tend to buy higher-ticket items when they do.
These metrics enable businesses to conduct objective analyses and pinpoint target audiences for more effective marketing campaigns. Companies typically use a scale of 1 to 5 for RFM scoring, though you can adjust the scale to better fit your evaluation needs.
Automated RFM Segmentation by BoostConnect
BoostConnect automatically segments your customer base using RFM analysis:
0 to 30 days:
0 to 3 purchases: RFM - Beginners
4 to 7 purchases: RFM - Growth
8 to 12 purchases: RFM - Champions
31 to 60 days:
0 to 3 visits: RFM - Doubtful
4 to 7 visits: RFM - Medium (Borderline)
8 to 12 visits: RFM - Loyal - Regular
61 to 90 days:
0 to 3 visits: RFM - Sleeping
4 to 7 visits: RFM - At Risk
8 to 12 visits: RFM - Needs Attention
Customising Recency and Frequency Metrics for Different Business Types
Our system offers the flexibility to tailor Recency and Frequency metrics to the specific needs of your business, allowing you to refine RFM segmentation for more precise customer management, thereby enhancing loyalty and satisfaction.
Customisation Capabilities:
Recency (Time Since Last Visit/Purchase):
Setting Intervals: Define intervals to assess customer recency based on your business type. For example, in retail, you might use intervals like 0-10 days (high activity), 11-20 days (medium activity), and 21-30 days (low activity). In hospitality, intervals might be 0-20 days (high activity), 21-40 days (medium activity), and 41-60 days (low activity).
Frequency (Number of Visits/Purchases):
Setting Ranges: Customise frequency ranges according to your business needs. For instance, a café might define ranges as 0-3 visits (low), 4-7 visits (medium), and 8-12 visits (high). In health and wellness services, the ranges could be 0-2 visits (low), 3-5 visits (medium), and 6-9 visits (high).
Benefits of Customizing RFM Segments:
Precise Segmentation: By adjusting Recency and Frequency values, you can create more accurate segments that better reflect customer behaviours, allowing for deeper insights into their needs and preferences.
Enhanced Marketing Efficiency: Tailored RFM segments enable more effective marketing strategies, targeting specific customer groups with personalised communications and offers.
Improved Customer Retention: Understanding and responding to shifts in customer behaviour helps boost loyalty and retention, allowing you to re-engage customers at risk of lapsing.
Click Settings:
Usage Examples
To demonstrate the system's capabilities, here are examples of predefined Recency and Frequency values for different business types:
Food and Beverage (Cafés and Restaurants)
Recency:
High: 0-10 days
Medium: 11-20 days
Low: 21-30 days
Frequency:
High: 8-12 visits
Medium: 4-7 visits
Low: 0-3 visits
Health and Wellness (Salons, Gyms, Spas)
Recency:
High: 0-15 days
Medium: 16-30 days
Low: 31-45 days
Frequency:
High: 6-9 visits
Medium: 3-5 visits
Low: 0-2 visits
Medicine (Clinics, Pharmacies)
Recency:
High: 0-20 days
Medium: 21-40 days
Low: 41-60 days
Frequency:
High: 4-6 visits
Medium: 2-3 visits
Low: 0-1 visit
Professional Services (Lawyers, Consultants)
Recency:
High: 0-25 days
Medium: 26-50 days
Low: 51-75 days
Frequency:
High: 3-5 visits
Medium: 2 visits
Low: 0-1 visit
Retail (Stores, E-commerce)
Recency:
High: 0-10 days
Medium: 11-20 days
Low: 21-30 days
Frequency:
High: 10-15 visits
Medium: 5-9 visits
Low: 0-4 visits
Hospitality (Hotels, Tourism Services)
Recency:
High: 0-20 days
Medium: 21-40 days
Low: 41-60 days
Frequency:
High: 5-7 visits
Medium: 3-4 visits
Low: 0-2 visits
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