Automatic customer segmentation examples

One popular part of Repeat Customer Insights is the automatic segments. The system uses RFM to score and segment the customers in your Shopify store and then it applies a number of segments to each customer based on their scores.

Each segment has a name, description, and a bit about how to reach/use each segment in your marketing. The purpose of this is to make it easy to find a segment you want to target, figure out how to position your marketing messages, and then try to reach them using the export or customer tags.

Instead of keeping those segments and advice in the app only, I've decided list them here. They should be useful even if you don't use the app, as they highlight a lot of common customer groups.

Average Spender

Average Spenders are right smack in the middle of your customer's behavior for spending. Their order amounts per order are close to your average order amounts, though some orders may be higher and others lower.

For this segment you could try to entice them to spend more with each order or try to increase your average order size across your entire store.

Defected High Spender

Defected high spenders have spent a considerable amount with you but they haven't ordered in forever. If you can get them back, they'll be a valuable customer but it'll require time and hard work.

With this segment you'll want to use reengagement and win-back campaigns. You could combine this segment with the Defected Whales as their behavior is similar, just with different order values.

Defected Low Spender

Defected low spenders haven't purchased recently, though since they didn't spend very much it might not matter. There's a good chance they were unprofitable customers too.

With this segment you could use a win-back campaign but you'll have a difficult time recouping your investment. Do it if you have every other defected segment targeted already, don't start with this one.

Defected Loyal

Defected loyal customers are high-frequency customers that have stopped buying from your store. They might be inactive but there's a good chance they aren't coming back.

There's not much you can do with this segment. You can try a reactivation or reengagement campaign to try to win them back but that could be a lost cause. If you have limited resources, it might be best to focus on other segments and use this one to learn why they left.

Defected (RF)

Defected (RF) customers are customers who have stopped buying from your store awhile ago. They could only be inactive but they have been gone a long time without any orders so they are either fully satisfied and don't need to buy again, or are unsatisfied and won't buy again.

By this point, there isn't much you can do with this segment. If you can analyze what marketing channels attracted them, you might be able to find an under-performing channel.

Defected (RM)

Defected (RM) customers are probably gone. They spent an average amount so their time with you could have just reached its natural conclusion.

With this segment a win-back campaign or similar could pay-off but make sure you've focused on defected higher spender and whales first, they'll have a higher potential return.

Defected Whale

Defected whale customers are probably gone. Sad too because they were the big spenders but you can't keep everyone forever.

With this segment try a win-back campaign or targeted advertising/remarketing campaign. They are customers who are worth a lot of revenue but winning them back will be difficult. It could be worth a try in the long-term, though other segments might be easier (the defection risk segments).

Defection Risk High Spender

Defection risk high spenders are customers who have spent more than average at your store but not recently. You might have lost them already or will lose them soon.

This segment is a prime candidate for win-back campaigns, especially campaigns that use discount ladders (e.g. 5% discount to start, followed by 10% if they haven't ordered, and so on). Your goal is to bring them back to your store for another order, even if that order isn't as large as usual.

Defection Risk Low Spender

Defection risk low spenders are customers who haven't purchased recently and haven't spent that much overall either.

With this segment a simple win-back campaign could bring them back, though be careful with the discounts you give. Since they haven't spent much, a discount could wipe out your profit on their orders.

Defection Risk Loyal

Defection risk loyal customers are ex-loyal customers. They have a higher than average number of orders but they haven't ordered recently. This means they could have gone to a different store (defected) or are on their way out your door.

For segment the name of the game is recovering them. You'll want to do something to bring them back for a new order. That could be discounts, premium bundles, or even 'abandoned cart'-ese reengagement/winback campaigns. Don't be afraid of heavy discounts here either, these customers showed strong past behavior that could lead to multiple future sales if they come back.

Defection Risk (RF)

Defection risk (RF) customers are on the edge of buying from someone else. They might be recoverable, especially if they are infrequent orderers.

You should target this segment with any reengagement and win-back campaigns you have. Recovering them could rekindle their purchases before they are fully gone.

Defection Risk (RM)

Defection risk (RM) customers are potentially switching away from your store. They've spent right near the average amount on their orders so they shouldn't be your top focus but campaigns targeting them should be modestly successful.

With this segment you'll want to deploy win-back and reengagement campaigns to get them to place another order. Tactics that boost AOV above your overall store's AOV could transition some into high spenders at the same time.

Defection Risk Whale

Defection risk whale customers are in trouble. They've spent the most with their orders but they haven't ordered anytime recently. If you can recover and reactivate them, they could transform into strong customers again. If you can't, they could defect (Aye, th' one thar go't away)

With this segment any kind of win-back or reactivation campaign could be fruitful. Don't be afraid to spend either, these customers account for your larger orders so by recovering them you could profit even if one order is lower than normal.

High AOV

High AOV customers have spent more than your storewide Average Order Value across their orders. They could be doing this on one order or on several orders.

Whatever the case, they are high-value customers that you should try to nurture.

For this segment you have two opportunities:

  1. First, you want to try to attract more of them. This will boost your overall Average Order Value and revenue.
  2. Second, you want to try to coax larger or more frequent orders from them. Discounts could work if you can get them to stretch their order sizes above the current levels.

Low AOV

Low AOV customers have spent less than your Average Order Value across all of their orders. They could be making multiple smaller orders instead of a single larger order or they could be buying products with a lower price than typical.

For this segment you'll want to use all of the regular AOV boosting tactics. Bundling and 'Free Shipping over X' types of offers could be fruitful to get their order sizes higher.

Loyal

Loyal customers are... well... loyal. These customers continue to come back to your store to buy and buy again. They show an above average level of order frequency and have purchased recent enough to be considered active.

For this segment you'll want to reward their loyalty. Offers, access to special deals, and other perks can keep their loyalty and move them into the higher VIP terrotory.

Minnow

Minnows are the opposite of Whale customers. They have spent the least amount and with the least frequency. They might have multiple tiny orders or a single very small order.

They aren't bad customers, they are just smaller customers. If you're making a profit on their orders then it's okay to continue serving them but you'll need to watch your costs closely.

For this segment you'll want to make sure you aren't promoting heavy discounts to them or you could be reinforcing their low order values and driving your profits lower.

Neutral (RF)

There's not much to say about Neutral (RF) customers. They haven't defected yet and show average repeat purchase behavior. They are firmly in the 'wait-and-see' segment.

With them, make sure you're sending them offers and your regular marketing material. Eventually they'll either engage and improve out the Neutral segment or they won't and will start to defect.

Neutral (RM)

Neutral (RM) customers who have ordered fairly recently but have spent about the average amount across their orders. If you can secure another order they could improve into high spenders or fall back into low spenders.

With this segment the best advice is to use your regular marketing and look at the Frequency metric for better advice. Eventually they will shift out of this group but until they do, you can't be sure how they'll respond to offers.

New

New customers are exactly what it says on the tin. They recently made their first and only purchase with you.

With this segment you should stress customer service, trust, and that you stand by your products. Reassure them about their purchase and show them how to get the most benefit from it. Invite them to contact you and connect with you on social media. With enough trust, they could turn into loyal and repeat customers.

Potential Loyal

Potential loyal customers are active customers who have started to make repeat purchases with some purchases made recently. This group has the potential to become Loyal or VIP customers but they could use some soft nudges.

For this segment recognize them and make them feel special. Exclusive events, limited-supply offers, or loyalty discounts can all work to keep them engaged. Also use your regular trust building strategies with them and any social proof you have to reinforce their behavior.

Promising New

Promising new customers are fairly new customers. Not 'still-in-shrinkwrap' new but more like 'worn-once' new. They ordered far enough back that you might consider dropping hints and incentives about their next order but not enough to do a full marketing blast. With the right marketing they could develop into more loyal segments.

For this segment make sure they are getting your regular newsletter and marketing. Offer them ideas about how to use the products they've purchased or other products you have for sale.

Recent High Spender (RM)

Recent high spender (RM) customers combine high spending and recent purchases. They are active and have spent a significant amount across all of their orders. They aren't at the level of the Whales but could grow into one with the right touch.

With this segment you want to continue your marketing to keep-in-touch and build trust. Social proof copy and how-tos for the products they own could be valuable reenforcement. Soft-sells of complementary products could help increase both the order value and recency.

Recent Low Spender (RM)

Recent low spender (RM) customers have recently ordered but their order amounts are lower than your store average. It would be valuable to figure out why: is it a merchandise issue where they just ordered inexpensive products or is it a marketing issue that attracted lower spenders?

With this segment you'll want to research why their orders are lower. Offering them incentives around boosting the order value could also be productive (e.g. Free Shipping over X, Gift with orders over Y).

Recent Whale (RM)

Recent whale (RM) customers combine high spending and recent purchases. They are active and have spent the highest amounts with their orders. This could be a combination of a single huge purchase or many large purchases, but they outrank other spending segments.

For this segment you'll want to dust off your red carpet and make sure to thank them and give them the best service you can. Free gifts or samples could be valuable here, they've probably given you enough profit to spend more freely. Make sure you continue to market to them so they continue to re-order.

VIP

VIP customers shine in all three levels measured. They bought recently, buy the most frequently, and have the largest orders. They are the top 1% of your customers (top 0.8% to be percise).

For them, you'll want to treat them special and entice them to continue their behavior.

Make sure you're communicating with them regularly, both automatically (e.g. newsletter) and manually (e.g. 1-off email). They also make great segments for targeting audience-based advertising (e.g. Facebook Lookalikes)

VIP (RF)

VIP (RF) customers are your most loyal customers. They have made the most purchases and have been recently active.

For this segment you'll want to make sure they are getting your newsletters and regular offers. This segment isn't rated on the size of their purchases so you'll want to use your normal incentives to increase their order sizes (e.g. Free Shipping over X).

Whale (FM)

Whale (FM) customers are your customers who have spent the most in your store based on the frequency of their orders (that's the F part). They are customers who consistently place large orders or placed such a huge order that it overshadows their smaller orders.

For this segment you'll want to treat these customers special and entice them to continue placing large orders. Give them special access, dedicated customer service, or even large order discount codes. They also make great segments for targeting audience-based advertising (e.g. Facebook Lookalikes).

Eric Davis

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Topics: Customer segmenting Rfm

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