As an e-commerce business, you cannot undermine the importance of understanding your customers. The mere wealth of information that customer behavior can unravel has the potential to boost customer loyalty and increase customer lifetime value.
The marketing techniques RFM (Recency, frequency, monetary) is being used to determine quantitatively which customers are best by checking how recently a customer has shopped, how often they purchase products (frequency) and the amount of money the customer spends (monetary).
This analysis is a new marketing technique that is being used by business owners to grow their businesses. In fact, brands use best customer segmentation software to do customer segmentation. It is frequently used in database marketing and direct marketing, and it has received added attention in customer segmentation or market segmentation as customers are being catered to. Products that will satisfy their needs are being marketed in a way to target them.
By taking the guesswork out of the equation, managers are now running their businesses in a more efficient way.
Managers are now using the best customer segmentation software to give their customers what they need in a more sophisticated way. As a result, there is no longer the need for any interaction between the customers and the owners of businesses. The data gives managers all the information they need so they can segment their customers and target them based on their interests or past behavior.
Using RFM to Grow Profits
Customers who have the ability to spend more can be catered to in ways more than one as opposed to those who don’t spend as much. This causes managers to increase profits when they sell more products to their best customers by putting out targeted ads on social media, on television, and the other ways in which they choose to advertise. Besides, this offers managers the opportunity to identify and reactive dormant or inactive customers with coupons and offers for returning.
It has been over 30 years since direct mailing marketers for non-profit organizations used an informal RFM analysis to send emails to specific customers when they are seeking donations. They thought that people who donated in the past would be willing to donate more times. With the use of best customer segmentation software and e-mail marketing campaigns, RFM has become a special tool.
Customers are now assigned a number that goes from 1 to 5 for each RFM parameter when RFM analysis is applied to data. The RFM “cell” is a term that refers to the combined scores. The best customers are found in the database after the customers are sorted. The “555” cell ranking represents the ideal customer.
Tactics used to keep ‘555’ Customers
Whenever good strategies are developed to keep ‘555’ customers, these customers are seen as the most powerful ones since the experience they had while they did business with you is fresh in their memories. This opens up exciting opportunities to boost customer loyalty. They can be given special membership cards, special offers, giving them discounts on some of the things they like buying most sometimes, etc. It can involve doing simple things like encouraging them to be loyal customers who will be willing to read your e-mails and other messages and keep on shopping on your website.
Business owners can develop long-lasting relationships with these ‘555’ customers and have a business that is always ROI-positive.
The way you create variables can influence your profits. The customers who fell in the lowest category can become good customers when they are encouraged and enticed by specific marketing strategies.
Unfortunately, it is not really possible for businesses to track user behavior and past purchases, and predict future interactions manually, especially when they are scaling.
NextBee‘s best customer segmentation software uses customers’ past behavior to forecast their activities, segment them, and help you plan successful promotions. By seamlessly integrating with leading CRMs and ESPs, we will unravel a wealth of valuable engagement data so you can figure out the best times to reach out and create personalized offers and messages that work.
Schedule a demo now to see how our customer engagement software can help your business soar to new heights. You might also want to check out all about contest promotion management software.
