Before starting any loyalty program, identify who your best customers are

There are lots of tactics for building customer loyalty. The first step missed by stores is identifying who your best customers. That's required so you can tailor your plans to getting more of those types of customers.

RFM and models based on RFM like Repeat Customer Insights' customer grades are simple to understand while having a lot of hidden power.

What I like about RFM is how well it scales to small and large store. They work on stores with hundreds of customers and stores with millions of customers.

Much of the advice for the different segments stay the same too, the main difference is how many segments you look at. Only a couple hundred customers, use five or so segments and group similar ones (like in Automatic Segments). Millions of customers? Use the full 125 segments provided by RFM.

You can even modify how many segments are in each component of RFM. The app uses five per component but you can use as little as three (for 27 segments) or as many as ten (1,000 segments) if you want to run it yourself.

Five RFM segments makes the most sense though: best, better, average, below-average, and worst.

Once you identify your best customers and who has potential, then the different loyalty tactics can start paying off.

Repeat Customer Insights automatically uses RFM and a custom grading algorithm to segment your entire customer base. It uses the data Shopify has already collected for you.

Repeat Customer Insights icon

Measure which customers you're retaining and which you're losing

In order to keep your best customers, you need visibility into what's going on with them. Repeat Customer Insights will help you track down where you're losing customers and how to better target new ones.

Install Repeat Customer Insights for Shopify

Eric Davis

Topics: Rfm Analysis Customer segmenting

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