Yesterday, we talked about targeting your best customers by identifying those who score highest in recency, frequency, and monetary (RFM) measures. But what about those customers who do not have high RFM ratings? Most are simply not in your sweet spot—they are not the best matches for what you do. A few were once highly rated in RFM, but are no longer your best customers—at least right now. What should you do?
Your job as a marketer is to try to get them back into that “top customer” segment.
How you do that depends on what’s wrong. You can use those same metrics to see how your customers have slipped out of your top segment. By analyzing those numbers, you can decide how to woo them back:
- “Not so Recency.” Customers who’ve had high RFM ratings who have suddenly stopped visiting your Web site (lowering their Recency rating) may now be frequenting the competition. Maybe you should send them an e-mail with an offer.
- “A bit lower Frequency.” Customers whose Frequency rating suddenly drops may no longer need the same amount of your products. Perhaps you may want to offer them a discount for referring a friend. Or expose them to other products you sell.
- “A little less Monetary.” Customers whose order sizes plunge (lowering their Monetary rating), may have found alternatives for some of your products. Perhaps offering them discounts based on raising their order size might bring them back into the top segment.
You’ll find that providing different offers based on RFM ratings will not only increase your conversions, but also raise your average order size and lower your promotional discount costs (because you can selectively offer discounts only in those situations where it raises your overall profits). You may also find that different marketing approaches (e-mail vs. search marketing) may prove more effective for your best customers, or that different areas of your Web sites are best at attracting new high-RFM customers.
Whatever you find, analyzing your RFM ratings and acting accordingly can only raise your sales.
