The beauty of using RFM for customer analysis is that it segments all of your customers. Even the ones with low-quality behavior.
These are the customers who only bought once, spent a tiny amount with their order, or ordered so long ago they forgot about you. They’re unlikely to ever buy again so you can mostly ignore them with your marketing.
Their behavior (and lack of behavior) helps the RFM model understand what good, loyal customers are.
It’s like how you don’t realize how dark your house is until you walk outside on a sunny day. The contrast between inside light and natural light helps define both.
Similarly, low-quality customers help define loyal customers.
One big thing to remember though, just because RFM creates a segment for these low-quality customers doesn’t mean you have to market to them. You absolutely shouldn’t invest resources in reaching them, especially when they are deep in the defection territory.
Ignore low-quality customers and focus your resources on the better customers who will produce a return for you. That’s the whole point of customer segmenting.
Repeat Customer Insights uses RFM to automatically analyze your Shopify customers. With over 150 segments applied, it gives your store the analytics power of the big stores but without requiring a data scientist on staff.
Eric Davis
