What is RFM analysis and what tasks does it solve?

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To determine the aha-moment of a product, you need to:

1. Analyze the AAARRR funnel and refer to the activation stage.

2. Make a list of key actions that the client performs with your product. Pay attention to their number and time of execution.

3. Analyze combinations of actions and identify those that best correlate with retention.

4. Conduct interviews with new users and find out at what point they decided to continue using the product.

Defining the aha moment will help make the product better, focusing list of afghanistan cell phone number on the characteristics valuable to the client. This will speed up the attraction of new clients and increase the loyalty of existing ones.In this article, we looked at how the customer segmentation tool works based on purchase frequency. It is suitable if you want to divide your base into groups, personalize messages, and get more leads.

RFM analysis is not the only segmentation tool, there are many more. But for some companies it gives a great result. We tell you under what circumstances.

RFM analysis helps segment customers by frequency and amount of purchases, as well as by time since the last purchase. It is used to build a strategy for addressing each individual customer group. It will help find both loyal customers and those who stopped communicating after their first purchase.

What does RFM literally mean:

Recency: This metric shows when the customer made their last purchase. This parameter helps to identify new customers and also to track the time that has passed since the last purchase.
Frequency (frequency). The parameter reflects the regularity of purchases. Helps to identify regular customers who are loyal to the brand and are likely to continue buying.
Monetary (money). Indicates the total amount the customer spent. The higher the value, the more funds the customer left with you.
Understanding which RFM segment a customer belongs to helps personalize communication. For example, with the help of RFM, a logistics company can assume which customer segment will use door-to-door delivery more often. And set up campaigns that will give the best result.

Examples of tasks for which RFM segmentation is used:

Regularly inform key customers about new products and promotions to maintain their loyalty.
Reactivate "sleeping" clients with special offers or promotional codes.
Motivate customers who make large purchases but infrequently with significant bonuses.
Use targeted advertising to bring back dormant customers.
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Pros and cons of the method
Pros:

Universality . RFM analysis is suitable for businesses in any industry: from an online home appliance store to a local coffee shop.
Ease of use. The method does not require special knowledge and experience. If customer data is collected automatically in a platform like CDP , then the customer base can be divided into groups in a few minutes.
Reduced marketing costs. The method helps optimize expenses by focusing on working with loyal customers instead of attracting new ones.
Cons: