loyal customers need to be retained;

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An example of segmentation by two parameters - recency and frequency of purchases. RFM analysis also includes the average check

The analysis is based on the Pareto principle : 20% of customers generate 80% of revenue. This means that a business should deal with them first and foremost. The RFM model helps to identify this promising group of customers and also offers tools for working with other segments.

RFM analysis began to be used in mailings and email marketing in 1995. Later, the method spread to other areas of business.
The essence of the approach is quite simple:

sleeping ones — reactivate;
those who left should be returned if they are of value to the company.
The process of attracting new customers is several times more expensive than paraguay phone number list organizing repeat sales to existing customers. Therefore, working with the base using the RFM method can bring a good additional profit to the business.

Why use it?
In addition to solving the main task - segmenting customers to choose the right strategy - RFM analysis gives businesses many other advantages:

Increases the level of personalization when working with customers. Consequently, your advertising, mailings and offers receive a greater response from people.
Increases audience loyalty because you understand customer behavior patterns and make more relevant offers.
Improves sales indicators - frequency of purchases and average check. If the company reminds about itself in time, provides special conditions to hesitant customers or competently carries out additional sales of related products, then the conversion increases.
Helps to return customers who are important for the business. And, on the other hand, allows you to abandon attempts to reactivate those customers who do not bring profit.
Reduces marketing and promotion budgets . Thanks to the individual approach, the efficiency of work increases. This means that the cost of the target action decreases.
As a result, LTV increases — income from one client for the entire period of cooperation, as well as ROI — the level of return on investment. The level of profit grows.