What is RFM segmentation?
RFM segmentation groups customers by how recently they bought, how often they buy and how much they spend, so each group can receive a suitable message.
Each customer gets a score on the three dimensions. Combining them creates groups such as champions who buy often and recently, customers at risk who used to buy but have gone quiet, and new customers with a single recent order.
The groups suggest different treatment. Champions might see early access, at-risk customers a reminder of what they liked, and new customers helpful onboarding content.
Keep it simple at first. A handful of well-defined segments that you actually email beats a complex grid you never use.
A worked example.
A hypothetical pet store ranks customers on each of the three dimensions and finds a group that bought several times last year but not recently. That group gets a personal note about new arrivals, while recent first-time buyers receive care tips.
Common mistakes.
- Building too many segments to use
- Setting thresholds that ignore the product reorder cycle
- Never revisiting scores as the business changes
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