Calculating your customers’ value through RFM segments may sound complicated, but Springbot does all of the work for you. After scoring your customers based on Recency, Frequency, and Monetary Value of their purchases, we segment them into personas so you can quickly and effectively tailor your marketing messages for each group.
1. All Stars – These are customers that bought recently, buy often and spend a lot. Since they’re already your biggest fans, market to them without price incentives to keep a high profit margin. Don’t forget to tell these customers about new products, how to connect on social networks, and about any loyalty programs you run.
2. Most Loyal – These customers are your most frequent purchasers. They are any customer who rates high in Frequency but may or may not rate high in the Recency and Monetary Value criteria. Since these customers always come back to buy again, you can ask them to enroll in loyalty programs or to leave reviews on your website (reviews also help with SEO because Google recognizes that as fresh content).
3. High Rollers – This group has spent a lot of money over their lifetime as your customer. This could be a few big purchases, or a bunch of small purchases. Either way, they trust your brand enough to spend a lot on your products. Target them with your most expensive products and top-of-the-line models.
4. New Money – These customers made significant purchases on their first order. Since these customers spent a significant amount on their first purchase, you want to convert them into a loyal returning customer. To do this, you can market to them with a Welcome or First Purchase Automation Flow, offer incentives to come back, and also ask for feedback about their experience through a survey.
5. Old Faithful – These customers buy often but don't spend very much when they do. This means that they trust your brand so your goal for these customers should be to increase their spend for each purchase. To do this you can offer rewards where they must spend a certain amount to receive a discount (eg. "Spend $100 and receive 15% off your entire purchase").
6. Lost Customers – These customers used to be valuable customers that purchased frequently and spent a lot but have stopped doing so. Since these customers were previously great customers, this is your chance to win them back! It is important to discover why the customer left - poor customer experience, lost to a competitor, or they view your products as seasonal or more of a 'one-time' purchase. To collect this information from the customer, you can send out a customer survey. From there, you can decide what type of incentive will win the customer back -- whether that is more competitive pricing, new product launches or just a friendly reminder that you miss them!
7. At Risk – This group used to be valuable customers but have not made a purchase in a while and are at risk of becoming a lost customer. Since these customers are at a high risk, you will need to prioritize re-engaging them with promotions that contain incentives like discounts. Though offering discounts may not be lucrative or feasible for every customer group, this group warrants more aggressive discounting because it is more cost-effective in the long run to win back and retain a customer than it is to acquire new customers. The goal for this customer group should be to re-engage the customer as well as regain their loyalty.
8. Blue Moons – These customers don’t purchase very often, but when they do they tend to spend a lot. These customers have the means to spend a large amount but choose to purchase sporadically. Since these customers occasionally spend a lot, you can target them with higher priced products. This group of customers may also purchase from your brand seasonally, so you can tailor your marketing messages to fit the season and re-engage the customer.
9. Long Shots – These customers spent very little, purchased very few times, and last ordered a long time ago. Since this customer group is very unlikely to purchase again, you won't want to spend a lot of time or resources on them.