rfm model conversion week
TRANSCRIPT
HELLO!I am Andra BaraganHead of Strategy @ MarketizatorYou can find me at [email protected]
STEP BY STEP GUIDE ON HOW
TO BUILD AN RFM MODEL
What we’ll talk about1. Customer Acquisition vs. Customer Retention2. RFM Model - what does it do?3. The ways you can use this model to increase
profits
Customer AcquisitionThe process through which you convert a visitor on your site into a client.
Calculate the cost by dividing the total expenses on acquisition to the total number of new customers you obtained in that time period.
Expenses include marketing, promotions/discounts, labor, display ads, targeted and non-targeted ads, etc.
Customer Retention The process through which you convert a one-time buyer into a repeat customerShows how loyal your customers areAn assessment of the product or service quality
“Attracting a new customer can cost as much as 15 times more than retaining an existing customer.”
Winning New Business in Construction By Terry Gillen
“If we keep doing what we’re doing,We’ll keep getting what we’regetting.”
Stephen Covey
80% of your business comes from 20% of your customers
Shift the focus from being oriented on transactions to putting the customer in the first place
Understanding each phase of the customer journey on your site will constantly grow your business
Customer Journey Phases
Awareness
Desire
Choice Reduction
Buying
Returning to buy again
Promoting your
product
They search for what they want
Found it. Need more information
Need more information
Made their choice
Appreciated the whole on/off site experience
Expect over-delivery
According to RJMetrics 2015 Ecommerce Growth Benchmark
Top Performing Companies create a “renewable resource” of loyal customers - By the end of year three, a majority of their revenue is coming from repeat buyers
After 24 months, 50% of revenue comes from repeat buyers
RFM MODEL
RFM ModelSimple form of customer database segmentationVery useful for high value customer programs, database reactivation, increasing loyalty and customer lifetime valueIncreases sales and productivityKeep track of your customers and build a relationship that can increase sales and productivity
What are we tracking? Recency Frequenc
yMonetary
Value
The time when theylast placed an order
How many orders they have placed in
the given period
How much money have they spent since their first
purchase (CLV/LTV)
Direct applicability in e-commerceOrders Order ValueVisits
What you need to track:
Client ID - uniquely identify each clientTransaction value Transaction Date
How to identify the loyal customers and how to segment your data base?
Categorize the data into bins
After you add your data in the spreadsheet, this is how the base analysis results look like:
Free RFM model template you can use - request presentation
NOW WHAT?
Define Strategic GoalsDepending on your business and the phase it is in, you will identify some converting formations
For example, if you have a frequency score of 4 and a monetary value score of 3, you will find out that repeat buyers tend to spend more and generate higher revenue
Clients with high recency are more willing to buy rather than those who haven’t bought anything in a while
Clients that frequently buy are more willing to buy again rather than those who only bought once
Clients that usually spend lots of money are more willing to buy again and generate revenues
Identify the customers with the highest RFM score
Start persuading them and make them feel pampered
Increase your visibility to them with promotions and special offers on social channels
Turn your VIP customers into your promoters
Who are your heroes?
Start talking to these important clients - communicate with themUse GTM to build these segments Target each segment with personalized content and promotionsAddress each of the segments according to the phase of the funnel they are inUse your conversion optimization tool to build up your scenariosBuild a real-time personalization program
Different heroes
Different messages
Find your best customers
Gain their loyalty
Increase retention on new customersEarn more money
Enjoy and keep going
Thank you!Any questions?