Understand The 3D RFM Model By Looking At It As A 2D Customer Grid


RFM being a three-component model makes it difficult to picture how it works.

If you can visualize a 3D cube in your head, that’s how RFM represents your entire customer base. But each individual customer would be a 3D point inside that cube, making it hard to visualize.

Instead of looking at all three components at once, you can choose look at only two components. Then your customers all show up on flat sheet (a plane, a 2D shape). In Repeat Customer Insights, this is called the Customer Grid.

When laid-out properly, Customer Grids can make RFM more intuitive to use. In the app, the higher scores are to the top-right and represent the best customers. The worst scores are in the bottom left, making them the worst customers.

(One caveat, the Frequency-Monetary grid behaves a bit differently but I’ll describe that at another time).

The middle areas are the “it depends” areas. That’s where the app’s description and advice come in handy.

RFM as a model is pretty powerful. It’s kinda difficult to run the analysis without software like Repeat Customer Insights and it takes a bit of work to get how the scores interact. Once you’re past that though, it’s easy to remember and work with.

Eric Davis

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 VisionPros.com, 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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