Automatic Segments Help Smaller Shopify Stores Retain Customers


To help RFM work better on small and mid-sized stores, I added Automatic Segments into Repeat Customer Insights a few years ago.

They consolidate each pair of RFM scores into a specific segment (like R5F3). Similar segments are then grouped to create the final Automatic Segments (R5F3 becomes the Potential Loyal segment).

The end result is that instead of 125 segments from RFM, there are about 30 Automatic Segments. Each customer is also assigned 3 segments based on their different behaviors.

The segment grouping also gives you a range of different size groups. The smaller groups are roughly 1/25th of your customers but the larger groups are up to 7/25ths.

These larger group sizes (but smaller than the customer grades) gives smaller and mid-sized stores more segmenting behavior to work with but without getting too fine-grained like RFM. Like I mentioned yesterday, you really want at least 200 customers in each segment. 400+ is much better.

With the Automatic Segments, even the smallest segment (the 1/25th one) should be large enough to start optimizing if you have 5,000 customers.

Eric Davis

P.S. The Automatic Segments can work with even large stores since it’s built on RFM. You’ll just be working with larger groups of customers at a time.

This originally appeared on the LittleStream Software Blog and is made available here to cast a wider net of discovery.
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Steve has entrepreneurship in his DNA. Starting in the early 2000s, Steve achieved eBay Power Seller status which propelled him to become a founding partner of, a contact lens and eyewear retailer. Four years later through a successful exit from that startup, he embarked on his next journey into digital strategy for direct-to-consumer brands.

Currently, Steve is a Senior Merchant Success Manager at Shopify, where he helps brands to identify, navigate and accelerate growth online and in-store.

To maintain his competitive edge, Steve also hosts the top-rated twice-weekly podcast eCommerce Fastlane. He interviews Shopify Partners and subject matter experts who share the latest marketing strategy, tactics, platforms, and must-have apps, that assist Shopify-powered brands to improve efficiencies, profitably grow revenue and to build lifetime customer loyalty.

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