Yesterday I wrote about finding your most loyal customers, the VIPs.
You have plenty more degrees of loyal customers though. Some are past VIPs. Some are upcoming VIPs. Some are loyal but not as strong as your VIPs.
Finding out who these loyal customers are can be more difficult than VIPs but RFM gives us an easy way.
Remember, RFM scores each customer in three areas with a score of 5, 4, 3, 2 or 1. For each score, every customer fits into one of those buckets.
Conveniently, each bucket is 1/5th (20%) of your customer base.
A score of 3 means the customer was average. Either right in the perfect middle or within 10% to either side.
This means that customers with a score or 4 or 5 are above average.
Combine all three scores and now you have a strong indicator of loyalty. Since VIPs have a score of 5 in all three areas, it makes sense to label customers with a 4 or 5 in all three areas as Above Average.
They might have 4's in everything.
They might have two 5's and one 4 (missing the VIP status by 1).
Or any combination of the two.
(VIPs are even included in Above Average since they have 5's in everything)
Due to how the math works, this is about 6% of your customer base (8 score combinations out of 125). So VIPs are your top 1% of your customer base and this Above Average segment are the top 6% of your customer base.
They are a pretty good size segment to concentrate your customer development and loyalty efforts on.
RFM, the VIP and Above Average segments, and many others are included in Repeat Customer Insights. Between the Customer Segmenting and the new Who Are Loyal focus pages, you should be able to easily find who your loyal customers are.
Eric Davis
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