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Growing better customers

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.

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Mike Moran

Mike Moran is an expert in digital marketing, search technology, social media, text analytics, web personalization, and web metrics, who, as a Certified Speaking Professional, regularly makes speaking appearances. Mike’s previous appearances include keynote speaking appearances worldwide. Mike serves as a senior strategist for Converseon, an AI powered consumer intelligence technology and consulting firm. He is also a senior strategist for SoloSegment, a marketing automation software solutions and services firm. Mike also serves as a member of the Board of Directors of SEMPO. Mike spent 30 years at IBM, rising to Distinguished Engineer, an executive-level technical position. Mike held various roles in his IBM career, including eight years at IBM’s customer-facing website, ibm.com, most recently as the Manager of ibm.com Web Experience, where he led 65 information architects, web designers, webmasters, programmers, and technical architects around the world. Mike's newest book is Outside-In Marketing with world-renowned author James Mathewson. He is co-author of the best-selling Search Engine Marketing, Inc. (with fellow search marketing expert Bill Hunt), now in its Third Edition. Mike is also the author of the acclaimed internet marketing book, Do It Wrong Quickly: How the Web Changes the Old Marketing Rules, named one of best business books of 2007 by the Miami Herald. Mike founded and writes for Biznology® and writes regularly for other blogs. In addition to Mike’s broad technical background, he holds an Advanced Certificate in Market Management Practice from the Royal UK Charter Institute of Marketing and is a Visiting Lecturer at the University of Virginia’s Darden School of Business. He also teaches at Rutgers Business School. He is a Senior Fellow at the Society for New Communications Research. Mike worked at ibm.com from 1998 through 2006, pioneering IBM’s successful search marketing program. IBM’s website of over two million pages was a classic “big company” website that has traditionally been difficult to optimize for search marketing. Mike, working with Bill Hunt, developed a strategy for search engine marketing that works for any business, large or small. Moran and Hunt spearheaded IBM’s content improvement that has resulted in dramatic gains in traffic from Google and other internet portals.

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