While you have to be careful averaging customer lifetime values (CLTV), they can be very useful when you keep them associated with the individual customer.
Knowing how much each customer has spent is a great way of segmenting. Customers who spend a lot will tend to share behavior, while same as customers who spend very little also share (different) behavior.
RFM analysis uses this information as part of the Monetary factor which Repeat Customer Insights segments into 5 equal-sized groups (e.g. 5's are the most, 1's are the lowest).
There are dozens of ideas to use CLTV-based segmenting in your marketing.
- VIP offers
- Priority customer service, dedicated reps
- Free products
- Early-access and product betas
- Order size/quantity discounts (e.g. free shipping above $X)
- Look-alike or suppression lists for advertising
Though CLTV alone usually isn't enough to get a full picture of a customer's behavior. Which is why RFM and Repeat Customer Insights evaluate other factors too.
There's a huge difference between a customer who placed a couple $2,000 orders compared to one who has placed 100x $40 orders.
Eric Davis
Segment your customers automatically with RFM
Segmenting your customers has always been touted as a powerful marketing tool but many stores avoid it because it can be time-consuming.
Repeat Customer Insights will automatically segment your entire customer base for you based on the valuable data Shopify has already collected for you. Ranging from 5 to 30 to over 125+ different segments using RFM and other models, you can pick how much power you want to harness.