The success of email marketing lies in the ability to properly target your campaigns. To achieve this, you first need to find out who your customers are. Get to know them and their consumer behavior thanks to RFM analysis. We will show you how to work with this customer segmentation model in e-commerce and increase your return on investment. Increase your profit by incorporating RFM analysis into your email marketing
What is RFM analysis?
It is a simple tool that we use to divide customers into groups based on their purchasing behavior . Its basic building blocks are three metrics, the initial letters of which give the acronym in the name:
- Recency – when the customer last made overseas chinese in worldwide data a purchase (the time that has elapsed since the last transaction).
- Frequency – how often the customer made purchases (number of transactions they made over a certain period).
- Monetary – how much the customer spent (total or average amount over a certain period).
RFM analysis, or segmentation, is one of the most widely used data analytics methods. The model was introduced in 1995 by Jan Roelf Bult and Tom Wansbeek, who united states america data described in their article how effective it can be for optimizing direct marketing campaigns.
With RFM, you will be able to set up effective marketing communications, improve the targeting of your campaigns, reduce costs , and, as many case studies web page design: what you should definitely consider show, also increase revenue. Thanks to this, the French company L’Occitane managed to increase profits from emailing by up to 2,500% .
Get to know the customers who earn you the most thanks to RFM segmentation
RFM analysis is based on the Pareto principle, which states that 20% of your customers generate 80% of your revenue. RFM segmentation can help you identify these top 20% of your customers, as well as the bottom 50% of your customers. By dividing your customers into groups, you can better determine which ones are worth investing in and how to approach them. RFM segmentation can also answer other questions, such as:
- Who has the potential to spend the most?
- Who shops with you regularly?
- Who needs long-term care?
- Who would it be appropriate to try to entice to buy with a discount?