What is RFM analysis and does it add value?
Organisations may hear that segmenting customers by RFM (Recency of last purchase, Frequency of purchases, and Monetary value of total purchases) will give customised guidance on how to retain customers or entice back lost ones. There are many assumptions to validate. Re:Adapt can help clients retain and regain customers not only with RFM, but also with deep context of customers’ experience.
The problem
Organisations are looking to make sense of how well they retain customers and get better at doing so. They want to know what went well and which levers to pull, ideally tailored to each customer’s specific needs and wants. RFM analysis and many other customer segmentation methods assume that segmentation is necessary because things cannot be tailored at the customer level, and that customers within the same segment will respond to an action in the same way. Today’s customer needs to be more deeply understood–the organisation that answers “what matters to me” wins.
The solution
Re:Adapt can deploy its capabilities in machine-learning modelling on large and disparate datasets to generate a clear set of actions:
- Determine where buying behaviour is and is not relevant to understanding the customer
- Clarify how certain customers want a service to be delivered to them, devising approaches that can be used in predictive models
- Simulate and deploy with tracking CX, product improvements, and marketing methods that will be most likely to retain–and delight–customers
RFM may demonstrate customer purchasing over time at a high level, but only when we get into the details of what problem the customer was trying to solve, and what the selection, purchase, and use experience was like, do we have any hope of getting to the “why” of the RFM results.
This can be very instructive and enable all levels of staff with ideas to improve and measure the way customers search for, select add-ons, and buy the product or service.
Including use cases in the analysis can inform product development but also how “pull marketing” could be achieved–that is, how the solution can be placed where and when the customer needs it.
If you are looking to make your business best-in-class, contact us at contact@readapt.science where you will see the insights we can help you bring to the surface. Do more with less by enabling your people to rapidly improve your customer experience and bottom-line at the same time.
