Why RFM has no set points that determine a customer's ranking

Recently a Repeat Customer Insights was asking about what triggers the RFM scores to change, like from Recency 5 to 4.

There are no set points or triggers that move customers from one RFM score to another.

Rather, RFM ranks each customer against your customer base as a whole and based on where the individual falls, that's their score.

For example, if a customer's reorders are more frequent than 85% of the other customers then their Frequency score would be 5 (the Frequency score for the top 80-100%).

That means if you have an event that changes customer behavior (e.g. big sale) those customers who bought will have their ranks improved relative to the customers who didn't buy. If their percentile rank shifts enough, they could end up with a different score and new segments.

That's the automatic self-balancing part of the model and why it works equally well for stores with 5,000 customers as stores with 1,000,000 customers.

RFM is just one of the models Repeat Customer Insights uses with its customer and order analysis. It comes with a 14-day free trial so you can see how it works and get some ideas right away.

Eric Davis

Segment your customers to find the diamonds in the rough

Not all customers are equal but it is difficult to dig through all of your data to find the best customers.
Repeat Customer Insights will automatically analyze your Shopify customers to find the best ones. With over 150 segments applied automatically, it gives your store the analytics power of the big stores but without requiring a data scientist on staff.

Learn more

Topics: Customer segmenting Rfm

Would you like a daily tip about Shopify?

Each tip includes a way to improve your store: customer analysis, analytics, customer acquisition, CRO... plus plenty of puns and amazing alliterations.