How to Segment Customers by Purchase History and Increase Repeat Sales

The customer base is the company’s main asset, and it should be used to the maximum. RFM analysis allows you to study and segment your customers by purchase history in order to select the most effective methods of work for them and increase repeat sales. In this article, we will tell you how to conduct RFM analysis and what strategy to use for each segment.

What is RFM Analysis

RFM analysis is a method of segmenting customers based hong kong phone number list on their purchasing activity. The entire base is divided into groups depending on the number, amount and duration of purchases. Then, an individual interaction strategy is developed for each selected segment.

The abbreviation RFM stands for:

  • Recency — the time that has passed since the last order.
  • Frequency – the frequency with which a person buys something from a company.
  • Monetary — purchase amount. Average customer check.

Analysis of these parameters helps to identify people how does content marketing come about who buy often and in large quantities, one-time and in small quantities, or those who have not ordered anything for a long time. Accordingly, sales and marketing departments can focus their efforts on the most promising clients, and for the rest – select appropriate special offers and activate them.

The process of attracting new customers is several times more expensive than organizing repeat sales to existing customers. Therefore, working with the base using the RFM method can bring a good additional profit to the business.

Why use it?

In addition to solving the main problem – segmenting customers to choose the right strategy – RFM analysis gives businesses many other advantages:

  • Increases the level of personalization when italy numbers working with customers. Consequently, your advertising, mailings and offers receive a greater response from people.
  • Increases audience loyalty because you understand customer behavior patterns and make more relevant offers.
  • Improves sales indicators  – frequency of purchases and average check. If the company reminds about itself in time, provides special conditions to hesitant customers or competently carries out additional sales of related products, then the conversion increases.
  • Helps to return customers who are important for the business. And, on the other hand, allows you to abandon attempts to reactivate those customers who do not bring profit.

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