How to Perform RFM Analysis - Detailed Instructions

[tmonower957]

Let's look at how to perform RFM analysis step by step. For manual analysis of a small audience, Excel or Google Sheets will be enough. Automatic tools of any CRM or special services like Business Scanner or Roistat will help segment large client bases.

Information gathering and customer assessment

First, you need to set the reporting period, usually one calendar year. Then we group clients into: those who made transactions and those who added products to the cart. As a result, we get statistics on paid and unfinished orders.
Collecting information about customers based on three parameters

The following information is entered into the table:

User's full name.
Date of last interaction.
Total number of orders for the period.
Total receipt of all transactions.
Next, the client is assigned a score from 1 to 5 points for each bulgaria consumer email list parameter. Usually, the gradation assumes 1 is the highest value, and 5 is the lowest. Based on the final scores, clients can be divided into new, regular, and gone.

First, customers are assessed by the first parameter, Recency — the date of the last purchase. The group with the fewest days since the last transaction is assigned 1 point, and so on in ascending order up to 5 points.

To evaluate the purchase frequency parameter, the number of transactions profitable for the business is determined. For example, 1 point - 5 purchases, 5 points - 1. For a correct calculation, it is important to set a real order bar.

The evaluation of the purchase amount parameter divides customers into more and less significant ones, even if they do not buy regularly. Each point has its own range of amounts, for example, 1 point - from 8,000 to 10,000 rubles, when 5 points - less than 1,000 rubles.

Each client is rated from 1 to 5 points according to RFM

Client grouping and choice of marketing strategy

Based on the analysis results, each client will have three points on RFM parameters, based on which different groups can be formed. For example, you can identify a segment of critically important clients - 111 or regular buyers with small checks - 223.

Each segment is given its own marketing strategy and personalized offers are developed. This way, customers will feel their value and individuality, which will increase their loyalty and sales.

Resume
RFM analysis is used in most business areas - it helps to launch an effective campaign and reduce resources for marketing activities. The method also allows you to optimize the target audience and reduce negative reactions to advertising.

For productive marketing, it is recommended to repeat the analysis every year, as the audience is constantly updated. The effectiveness of RFM analysis primarily depends on the size of the client base, so you need to collect at least 10,000 clients per year. The method is not suitable for working only with new clients and will not give a complete picture of leads who have made only one transaction.