Create three columns in the table for each metric and then fill the row with data in ascending order. The core of the poodle is to set boundaries that determine which customers fall into one group and which will no longer belong to another. Therefore, divide all three metrics into several levels and define the intervals in which you will move.
For example, you can divide recency by the number of days or months since the last purchase, which will create a group of customers who have just cash app database purchased, in the middle of the year, and a long time since the purchase. You can create three to five groups depending on the size of your sample. We recommend dividing the remaining metrics so that you have groups of approximately equal size.
Remember that everyone has to belong somewhere
but they also have to be placed in only one group. To better determine how important each customer segment is to you, calculate your RFM score . This involves recalculating individual metrics according to the weight you assign, with Recency usually having the highest weight and Monetary the lowest.
RFM score = (segment Recency × weight Recency) + (segment Frequency × weight Frequency) + (segment Monetary × weight Monetary)For greater clarity, visualize all data in a cube or block chart . The result of your work should then be a chart presenting the dimensions of all three metrics. If you then mentally cut the cube (or block) into whatsapp data individual parts, you will see customer segments according to their consumption behavior.
Image source:Jan Tichý
Watch the recording of Jan Tichý’s lecture , which explains the entire mechanism of RFM analysis very clearly.
Use the results of RFM analysis in practice
After you’ve gone through the process above, it’s time to apply the results. Look at the customer groups you’ve identified from your RFM analysis and think about:
What do these people expect from you?
What can you offer them?
Then set up automatic email campaigns 5 tips to optimize your online meetings for each segment accordingly.
Segment Behavior description What can you do for them?
VIP customers Those who have purchased recently purchase most frequently and for the largest amounts. Offer them a reward, such as being the first to receive new products or creating a special club for them. The goal is to retain these customers.
Potentially loyal customers Recent customers who have made more than one purchase for a decent amount. Encourage them to sign up for your loyalty program and recommend related products. Your goal should be to turn them into VIPs.