Presentation on how to build an RFM Model for your business, whether online or offline and make the most out of the clients you already have.

1. HELLO!
I am Andra Baragan
Head of Strategy @ Marketizator
You can find me at andra.baragan@marketizator.com

2. STEP BY STEP
GUIDE ON HOW TO
BUILD AN RFM
MODEL

3. What we’ll talk about
1. Customer Acquisition vs. Customer Retention
2. RFM Model - what does it do?
3. The ways you can use this model to increase
profits

4. Customer Acquisition
The process through which you convert a visitor on your site into a client.
Calculate the cost by dividing the total expenses on acquisition to the total
number of new customers you obtained in that time period.
Expenses include marketing, promotions/discounts, labor, display ads,
targeted and non-targeted ads, etc.

5. Customer Retention
The process through which you convert a one-time buyer into a repeat
customer
Shows how loyal your customers are
An assessment of the product or service quality

6. “Attracting a new customer can cost
as much as 15 times more than
retaining an existing customer.”
Winning New Business in Construction By Terry Gillen

7. “If we keep doing what we’re
doing,
We’ll keep getting what we’re
getting.”
Stephen Covey

8. 80% of your business
comes from 20% of your
customers

9. Shift the focus from being oriented on
transactions to putting the customer in the first
place

10. Understanding each phase
of the customer journey on
your site will constantly
grow your business

11. Customer Journey Phases
Awareness
Desire
Choice
Reduction
Buying
Returning to
buy again
Promoting
your product
They search for what
they want
Found it. Need more
information
Need more information
Made their choice
Appreciated the whole
on/off site experience
Expect over-delivery

12. According to RJMetrics 2015
Ecommerce Growth Benchmark
Top Performing Companies create a “renewable
resource” of loyal customers - By the end of year three, a
majority of their revenue is coming from repeat buyers

13. After 24 months, 50% of revenue comes from repeat buyers

14. RFM
MODEL

15. RFM Model
Simple form of customer database segmentation
Very useful for high value customer programs, database
reactivation, increasing loyalty and customer lifetime value
Increases sales and productivity
Keep track of your customers and build a relationship that
can increase sales and productivity

16. What are we tracking?
Recency Frequency
Monetary
Value
The time when they
last placed an order
How many orders they
have placed in the
given period
How much money have
they spent since their
first purchase
(CLV/LTV)

17. Direct
applicability in
e-commerce
Orders
Order Value
Visits
What you need to
track:
Client ID - uniquely identify
each client
Transaction value
Transaction Date

18. How to identify the loyal
customers and how to
segment your data base?

19. Categorize the data into bins

20. After you add your data in the spreadsheet, this is how the base analysis results look like:
Free RFM model template you can use - request presentation

21. NOW WHAT?

22. Define Strategic Goals
Depending on your business and the phase it is in, you will identify some converting
formations
For example, if you have a frequency score of 4 and a monetary value score of 3,
you will find out that repeat buyers tend to spend more and generate higher
revenue

23. Clients with high recency are more willing to buy rather than those
who haven’t bought anything in a while
Clients that frequently buy are more willing to buy again rather than
those who only bought once
Clients that usually spend lots of money are more willing to buy
again and generate revenues

24. Identify the customers with the highest RFM score
Start persuading them and make them feel pampered
Increase your visibility to them with promotions and
special offers on social channels
Turn your VIP customers into your promoters

25. Who are your heroes

26. Start talking to these
important clients -
communicate with them
Use GTM to build these segments
Target each segment with personalized content and promotions
Address each of the segments according to the phase of the funnel they are in
Use your conversion optimization tool to build up your scenarios
Build a real-time personalization program

27. Different heroes
Different messages

28. Find your best customers
Gain their loyalty
Increase retention on new customers
Earn more money
Enjoy and keep going

29. Thank you
Any questions?