Picking one and only one metric for customer analysis

I was thinking, if I had to pick one and only one metric to look at for customer analysis, I think I'd pick Recency.

That's the first part of the RFM model and while I'd rather use the whole model, the Recency would be a good single metric. Recency tracks how recent a customer has done something, in this case, how recently they've placed an order.

RFM and Repeat Customer Insights changes it from a date into a score from 1-5 so you have 5 equal(-ish) segments of customers.

With that alone, you could create a pretty good behavioral marketing plan. Here's how I'd do it.

Score of 5. These are customers recently ordered so keep any sales-based marketing to them minimized in favor of customer service or brand-building marketing. Don't push products onto them, but let them organically find them.

Score of 4. These customers would start to hear more about complementary products as part of other content. Primary calls to action would be centered around learning, entertainment, or other non-sales goals with sales being secondary.

Score of 3. Now the sales-based marketing starts to pickup. Each message should have a clear purchasing call to action. We'd want to convert them as soon as possible (which would reset their score to 5).

Score of 2. These customers are on their way out and ordered a long-timer ago. Anti-defection messages would be good here, along with discounting.

Score of 1. At this point the customer is probably gone. Long-term, reminder based marketing might get them to reactivate and buy again but I'd avoid investing in this segment beyond automated methods.

Using this one metric, you can see how a whole behavioral marketing system can be built. I'd tend to use email (I like email) but the system could be built with ads, social, physical marketing, or any combination.

Then if you add in the full RFM model or any other metrics that Repeat Customer Insights, you can do a lot more. Even just a second metric like Frequency or Latency could add a whole new dimension to your marketing.

Or keep it simple and just stick with one metric.

Eric Davis

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Topics: Behavioral marketing Customer analysis Recency Rfm

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