Every e-commerce business comes with a set of challenges

These go far beyond selling out our merchandise and getting profit as fast as possible. One of the most important tasks we face is communicating with customers in the right way. After all, customers are crucial to any business. Today, when modern technology is used in every part of life, communication is usually done via e-mail. So, what should you know about email marketing then?

RFM – what’s it all about?

Before we begin our email marketing routine, let’s learn one simple technique – RFM. This method involves the allocation of points to our customers so that they can be grouped according to a specific criterion.
In the first category, where R stands for recency, we assign points depending on the last time the customer made a purchase in our store. If they did it the current or previous week, they are given a maximum number of points (on a scale from 1 to 5, it would be 5). If a purchase was made a long time ago, the client gets only 1 point.
The second category, where F stands for frequency, describes how often the customer buys our products. Obviously, the higher the frequency, the more points they get.
The last category, M, stands for monetary. It determines how much money the customer has spent in our store. Similarly to the frequency factor, the more they spend, the more points they are given.

RFM – why use it?

Once the points are assigned to each client, we can divide them into 2 categories. The first group will comprise the clients with many points, and the other those who have very few of them. What do we know based on this separation?
First off, people from the “better” category (those with more points) will be less responsive to various promotional campaigns. On the other hand, they will welcome personalized e-mails, e.g., asking them about any suggestions to improve our business. That’s why we should address them more individually, thus making them feel appreciated and noticed. As for those with a low RFM rating, they will be more susceptible to marketing campaigns/promotions, which will encourage them to come back to our store. This way they can also acquire a higher RFM rating in the future.

RFM technique is useful when it comes to one more issue – singling out key customers. It’s pretty obvious that extra attention should be paid to existing clients. Research clearly shows that retaining such customers is not only about 6–7 times cheaper than acquiring a new one, but their loyalty allows us to lessen the blow of price updates. Besides, if it weren’t for loyal customers, our business wouldn’t even have a shot at success.

All things considered,

it’s a good idea to group customers according to a specified criterion, as it enables optimal communication. This in turn will prove beneficial for both sides.