February 17, 2024
“How to make good sales?” A popular question for merchants. and marketers
I must say that besides “good products” what is equally important is Products that meet needs And there is enough incentive for customers to make purchasing decisions.
But of course, not all customers have the same life background, social status.
Therefore, the purchasing behavior of each person It’s definitely not the same.
Therefore, “customer segmentation” is necessary. So that brands can choose appropriate marketing strategies to attract customers.
One of the tools that helps segment interesting customer groups is the “RFM Model”.
So what is the RFM Model? How can it be applied?
RFM is an abbreviation of 3 words.
– Recency is the most recent purchase.
– Frequency is the frequency of purchasing.
– Monetary is the purchase amount per time.
The concept of the RFM Model is to try to divide customer groups (Customer Segmentation) according to purchasing behavior. Made up of these 3 words.
The next step is These 3 parts of purchasing behavior will be analyzed and “rated 1-5”.
1 point is the lowest to 5 points is the highest.
To rank what type of customer group each customer is. And how important is it to the brand?
Let’s take a look at how to score based on the information in each item..
– Recency is information about the customer’s latest purchase or service use.
If the customer has recently purchased a product or used a service, they will receive 5 points.
But if the customer last bought several months ago Or many years ago will receive reduced points.
– Frequency is information about the frequency of purchasing products or using services by customers.
In this section, take information about how often customers purchase products or use services to evaluate.
For example, if a customer comes to use the service every day. Buy products from our brand once a week. will receive a high score of about 4-5 points
But if the customer comes to buy products or use services only once and then disappears, he or she will receive only 1 point.
– Monetary is information on how much a customer purchases or uses services.
If customers buy a lot of products or use services, such as buying a lot and paying a lot, they will get a high score.
But if you buy less products or use services at low prices, including not buying the products or using the services at all, such as putting the products in the shopping cart but not yet paid will receive reduced points.
It must be noted that giving Score 1-5 can be flexible. and adjust according to the perspective of each brand
After giving each customer a rating
The next step is to calculate those scores. Then plot it on the RFM Model table, which is a 5×5 grid (as shown in the picture accompanying the article).
It represents the Recency Score value on the X or horizontal axis.
and substitute the value (Frequency Score x Monetary Score) / 2 on the Y or vertical axis.
When the plot is completed on the table. We will know What type of customer is each customer?
There are 11 types in total, including:
1. Champions are the brand’s most important customer group.
This is because this group of customers has just purchased a product or used a service. There is also a repeat purchase rate. and high spending volume
Brands should therefore retain this group of customers as best they can. Do not let this group of customers go to competitors.
Importantly, this group of customers It is also a group that creates “Word of Mouth” or has word of mouth spread. Makes our brand become more well known as well.
2. Loyal Customers is a group of customers who have a high spending rate. and a higher repeat purchase rate than general customers
Even though this group of customers has not just purchased a product or used a service. But it is considered to be a group of customers with high spending volumes. Therefore, we must try to retain this group of customers. Don’t let it disappear from the brand.
For example, there is a Loyalty Platform that divides customers into tiers.
When customers have repeat purchasing behavior, they will be upgraded to a higher tier and receive more privileges.
3. Potential Loyalist is a group of customers who do not buy products or use services often.
But this group of customers has just placed an order. and have high spending amounts
This makes this group of customers more likely to move up to become Loyal Customers.
Therefore, if marketing to this group of customers, the main strategy is to quickly create an impression.
Make customers believe that The brand cares and values the value of its products and services.
For example, Apple has a strategy to create an impression. Such as free name engraving or printing services on devices such as AirPods.
4. New Customers are customers who have recently ordered products or used services. But this is the first order. Therefore still do not dare to spend at a high value.
For this reason, what brands should do is “Make an impression”
Make this group of customers feel that There is nothing wrong with purchasing our products or using our services. and want to come buy or use the service again
For example,
– Beauty Clinic who often call customers after receiving service To inquire about the experience of using the service and make the next appointment to follow up on symptoms
5. Promising is a group of customers who have recently purchased products or used services for the first time. But there is a low repeat purchase rate and spending value.
This means that this group of customers is interested in products and services. But not enough to take it into a part of life.
Therefore, products or services that are more relevant to customer behavior should be offered.
For example,
– Increase repeat purchase rates with a strategy for bringing receipts Come use it as a discount next time.
– Increase the value of spending even more with the Up-Selling strategy such as a buffet restaurant with a variety of prices to choose from.
6. Need Attention is a group of customers who have orders, repeat purchase rates. And the timing of the last purchase was exactly average.
If brands don’t try to build relationships with this group of customers, It may cause customers to lose interest in the product or service.
Therefore, strategies that brands should follow include:
– Offer limited-time offers like Flash Sale to encourage repeat purchases or services.
– Show the benefits of products previously purchased in other aspects. To make this group of customers more interested in products or services, such as Baking Soda, which in addition to being used for making desserts Can also be used for cleaning
7. About to Sleep is a group of customers who haven’t ordered in a while. Have repeat purchases and is worth buying below average
But it is still considered a customer base. If the brand doesn’t try to bring customers back This group of customers will definitely disappear.
Therefore, if the brand still wants to retain this group of customers You might try offering special promotions. for this group of customers To encourage customers to return to use the service
8. Can’t Lose is a group of customers who used to be Champions, have purchased products or used services very often and are among the customers with the highest spending value of the brand. but have not returned to purchase products or use services for a long time
This may mean that these customers switch to competing products. or being dissatisfied due to a mistake in the product or service
For example, One customer who came to purchase a beauty course package. That is the most expensive in our clinic.
But that customer is long gone. After finishing that course Because I found another place that offered a similar package. at a more worthwhile price
What brands can do with this group of customers is Find an opportunity to ask individual customers: Where are there problems with our service? Ready to offer promotions that are more worthwhile to customers
9. At Risk is a group of customers who have previously spent and repeat purchases are very high but have not returned to purchase products or use services at all in the past
This group is similar to the previous group. But it’s even more serious that if the Can’t Lose group last bought our stuff 1 year ago, the At Risk group hasn’t bought our stuff for much longer than that.
It may be that In the past, there was something that made this group of customers forget our brand..
Therefore, we must find out what has changed. So what should I do? To get this group of customers to come back
It may start by asking: What do these customers want? In order to meet the needs at the right point.
10. Hibernating is a group of customers who have previously purchased products or used services. But a very long time has passed. including low quantity and frequency of purchases
which this group of customers There is still a possibility that the brand will bring it back with advertising to make customers think about the brand. and encourage them to come back to buy or use the service again
11. Lost is a group of customers who have not returned to buy products or use services at all. and the quantity and value of the ordered products are very low
This group is not listed in the table in the picture accompanying the article. Because it is a group that does not need to be given importance
It is possible that this group of customers has already stopped using the product. or have bad feelings towards the brand
which is considered difficult To change the minds of this group of customers to come back again..
Therefore, for these last two groups, promotions may be made. Or do various campaigns to bring this group of customers back. But they may not consider spending a lot of marketing budget on this group.
Because if the customer doesn’t come back must let go Because this group of customers has low volume and number of product purchases.
With all these steps Brands can be ranked accordingly. What kind of customer groups are there? And what marketing strategies should be used to suit each type of customer?
Having said that, brands don’t actually need to market to all 11 types of customers.
But you can choose to market to specific customer groups according to the principle of “Pareto 80/20” about “doing less and getting more.”
That is, choosing to spend a marketing budget. Only 20% of important customers
Such as Champions, Loyal Customers, Potential Loyalist customers.
This may result in a response as high as 80%, such as customers coming to buy a lot, pay a lot, and buy again.
Meanwhile, other customer groups such as New Customers, Promising, Need Attention, About to Sleep, and Can’t Lose gradually decreased in importance. Or choose to market to specific customer groups that the brand is interested in
For customer segments like At Risk, Hibernating, and Lost, brands can be given the least importance. Because they are almost a group of customers who have nothing to do with the brand.
Just like this, the brand doesn’t have to waste its budget. Don’t waste your investment.
But it can be marketed to the point. and most effective..
