March 9, 2011

RFM Messaging and Strategy: Part 3

by Kelly Lorenz, Marketing Strategist at Bronto

This is the third and final post in the RFM series. Read part 1 and part 2. We'll examine a few more segments, based on the ranges from the original post, and then you'll be ready to take it to the next level.

The best performing/"1" in only one category

These customers have a "1" assigned to them in either the "R", the "F" or the "M" and a different assignment for the other two categories. For those with a "1" in recency, we may want to give more time, ie. wait until a cycle passes, to see if they drop down into the next range or if they stay in the "1" category.

Apple Orange Pear Cross-sliceFor those with a "1" for either frequency or monetary value, there's opportunity. Those that purchase with a high frequency, but aren't yet in the "1" range for monetary value, seem to purchase low ticket items based on income restraints, interests, automated reorders, or so forth.

Take a look at what they are buying; if it tends to be one particular category, try pushing them toward bigger ticket items and see how it does. If it's the same consumable product, perhaps try to cross-sell them on complementary products or items customers typically buy after they've bought that item.

If the customer is a "1" in the monetary value, they are extremely beneficial to your company and have the potential to continue to be. They've developed a considerable investment into your products, so it's important to recognize that and treat them as valuable. Again, take a look at their buying behavior. Did they buy once or twice or did they stop buying six months ago? Look for any trends in the data for blips like this as you have the opportunity to address.

If they stopped buying six months ago, perhaps their circumstances changed. Maybe they moved, got married, became pregnant, lost their job, etc. You really don't know without asking them. Ask them what changed and what you could be doing better for both those that stopped buying and those that haven't bought a fair number of times.

The lowest performing/"5" in only one category

These are what I would call your "hopeful" segments. There's clearly something you could be doing better, but all hope is not lost. Following the advice above for these segments can be a great first step.

These groups also are ripe testing grounds for you to determine how to go after some of the 2s-4s. If you see a boost in response after placing high-ticket items in an email to a "5M", you could expand the test out to the 3s and 4s to see if it works for them as well.

The bottom line

The ultimate goal is to push to continually move folks to the "1" category. By testing and analyzing, you can push that 5% of all 1s to 10% or more. And, if you can, you should be doing this analysis on a product category level as well to allow for further segmented and relevant messaging.

Also, you will want to regularly adjust the ranges based on performance. $1,000 as the threshold for "1M" may tomorrow be $1,500. As I mentioned in the last post, don't just rest on your laurels and become satisfied once the customer reaches all 1s, continue to push the limits. Go get 'em and come back and tell me how it goes!

Kelly Lorenz
Email Marketing Strategist at Bronto
@KNLorenz

About the Author
Kelly Lorenz's picture

Kelly Lorenz, Marketing Strategist at Bronto

Read about Kelly

Comments

Submitted by Anna Pfeiffer on

Hi Joel,
This is absolutely something that you can do without scoring / assigning values to subscribers! Once your purchase history is available in Bronto, you can create segments based directly on the data alone to apply the RFM model. By using data points like the number of purchases, the overall total spent, etc. you can begin to group subscribers into segments and target them specifically.

Join the Conversation