Using customer grades to define valuable customer behavior

Customer grading is one customer analysis that Repeat Customer Insights includes in its suite.

This is where each customer is graded with a letter grade based on their behavior:

• Grade A customers are your best scoring customers. These will include your VIP, loyal, and fans that you should cultivate.
• Grade B customers didn't make the cut for Grade A but are still above-average. They could include upcoming great customers that just need a nudge.
• Grade C customers are your average customers. They might be new customers without a lot of behavior, prior great customers who have since changed their buying behavior, or customers with basic buying behavior.
• Grade D customers are below-average customers. They might fall in here due to buying less frequently, a long time ago, or aren't showing the customer behavior of your better customers.
• Grade F customers are your weakest customers, behavior-wise. They might include defected customers or one-time buyers.

The benefit of this grading over something like RFM is how simple it is to understand. Only five segments. Customers gradually improve from F to A with good behavior. They decay from A to F with bad or no behavior.

It's also easy to compare customers against each other. An A customer is objectively better than a B customer.

Eric Davis