Using Recency and Frequency to measure customer loyalty

In Repeat Customer Insights there are a few insights you can pickup by comparing the Recency-Frequency (RF) Grids.

The segments to the top right are the best for repeat customers, the ones to the bottom left are the worst.

If segments to the right are increasing (higher Frequency), that's a sign that new customers are coming back and becoming more loyal.

If segments in the top three rows are increasing (higher Recency), that shows customers being responsive and reordering.

If segments to the bottom (lower Recency) are increasing, that's a sign that customers aren't buying again and might be defecting. If it's the bottom left, those are customers who haven't purchased that much. If it's the bottom right, those are loyal customers defecting.

Comparing two grids will show you how the customer flows shifted. Especially comparing grids 3, 6, or 12 months apart or at the start/end of a busy period (e.g. winter shopping).

Eric Davis

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Topics: Customer loyalty Rfm

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