Getting loyal and engaged customers is very important for anyone running a business. The use of modern analytical tools, such as RFM reports, is becoming increasingly popular in this regard. They allow you to categorize your company’s customers, making it easier to personalize your offerings and better tailor your products to a specific audience. We’ll show you how you can use RFM analytics.
What is RFM and why it helps you segment your customers
The name RFM is an acronym for the English words that make up the different parts of this analysis: Recency, Frequency, Monetary.
Recency looks at when a customer bought something from a company (whether the purchase was made recently) and, based on this, can group people into the most active ones who have just used your offer. This way you can also find out who hasn’t been interested in buying for a long time.
Frequency shows the frequency of purchases. It makes it easier to segment into those who are eager to buy and you can see their commitment, those who make fairly regular intervals in their purchases and those who buy occasionally, very rarely.
Monetary reports on the amount of money spent by the customer. In this way, it divides people into those who bring the company the highest profits and those interested only in the lowest-priced products.
How you can use RFM analysis in practice
Imagine you want to launch a new marketing campaign for your exclusive limited offer. Without RFM and segmentation, your ad will reach a large number of customers who haven’t used your company’s services for days and are interested in a completely different, cheaper type of product. The least affluent people who have so far bought only the lowest-priced items from you may even feel offended, and after all, that was not the goal. When you use analytical tools such as RFM and apply segmentation, you are sure that your offer will be seen by users who show commitment and are able to spend their money on such a product.
A loyal customer, or what kind of customer?
RFM reports allow you to identify buyers who are eager to return to your company and make frequent purchases. By personalizing content for them and creating a loyalty program, you can build a strong relationship with your customers and make them more likely to return. RFMs are also useful in encouraging the least active people to take advantage of your offer. So if you see that some people have potential and may become more active in the future, once you tailor and send the right advertising campaign to them, you have a chance to get more loyal customers who will begin to identify with your company’s message. When they have a need to buy something, they will definitely look for it from you in the first place.
RFM reports as one of the functionalities of iPresso
In iPresso, RFM analysis not only allows you to analyze data, but also to effectively segment customer groups. In addition, thanks to Marketing Automation scenarios, you can automatically send different messages depending on which group a person is in. Thanks to this, you can easily send, for example, an email with an advertisement for new products to customers defined as “loyal”, while those who are not very active can be encouraged with a discount code. In iPresso, the classification of contacts is set by default, and the report provides up-to-date data every day, as it refreshes automatically once a day, at night. RFM reports are widely used in e-commerce or tourism, among others, where a company can focus and create an offer, for example, for those who generate the most revenue.
Summary
RFM reports help you divide your customers into specific segments according to three criteria for their purchases. The analysis allows you to determine which people are loyal and return to your company frequently. With personalization, you can then dedicate special offers and discounts to such customers to increase trust. You can also easily reach those who have so far made purchases only occasionally by offering them appropriately selected products and encouraging discount codes.
If you want to try RFM reports and other tools, feel free to use iPresso today! We are offering a free 30-day trial access to our platform.
Leave a Reply