I frequently get asked about how Customer Segmenter works and what goes into its customer scoring.
Customer Segmenter uses three values in its grading:
- How recent a purchase was made (Recency)
- How many purchases have been made (Frequency)
- How much has been purchased (Monetary)
This is the classic RFM segmenting that has been used by decades in database marketing.
Each customer is graded in all three areas from 5 (best) to 1 (worst) relative to your other customers. So a customer with a Monetary of 5 means that they are in the top 20% of your customers in terms of money spent, a score of 3 would be the middle 20%, etc.
The final letter grade (A-F) each customer gets is a summary of their three grades and acts as a quick visual indicator for the customer. Recency is the most powerful factor so it makes up the majority of the letter grade.
Shopify sends me new customer and order data right away and the grading is recalculated every hour round the clock.
Have you tried out Customer Segmenter yet? You can with a free 14 day trial.