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Ecommerce Customer Segmentation: Steps to Perform RFM Analysis?



RFM analysis is the eCommerce metric that helps in the analysis of past purchase behavior. In this way, customers are divided into groups according to their buying habits. RFM is the short form of recency, frequency, and monetary value. Each term has its meaning. It defines recency as the time since the last purchase. Frequency is the number of purchases while the M is the monetary value. It is the best tool to optimize marketing and help in identifying the purchase ratio.

Is RFM beneficial?

Yes, the companies who use these metrics avail multiple advantages like they get improved customer retention, response rate, revenue, and the conversion rate. All these factors play a role in improving your business. For example, if we say what is conversion and how it is helpful? Then the answer is simple. It is the term that describes the purchase of the visitor from the online store. More the number of purchases more conversion and more benefits to the company. the main goal of online business is that people visit the site and buy the product. Ultimately when a consumer buys the articles it improves conversion, provides better response and helps in customer retention.

Steps to analyze RFM

Now the question is what steps are taken to perform this analysis to get the beneficial result. You have to perform three simple processes. The important thing is that you have the RFM software that is important to analyze all data and provide you accurate results. Once you download the software, follow the procedure below

  • First download the RFM analysis scripts and related sample file from the source
  • after that you have to prepare the.CSV file having all orders, for the beginners, they get the facility of the template sample order. they can replace the order with that to prepare their own sheet.
  • The final step is the execution of the RFM script. It is the place where you have kept the order files. It contains three arguments. These are order files, dates of the order table and output file with RFM.
  • Finally, create the RFM segments in the.CSV file with the specific name.
  • Now its time for email marketing

Get benefits from RFM and market through emails.

RFM is the best source to market your brand. Once you prepare the RFM segments you can use it for email marketing. Thinking how? Very easy follow the steps below

  • First, select the particular RFM segment. You can take the best customer so the lost one.
  • Now create a hypothesis to check which one is ideal for a particular segment
  • Now write the purpose of the email and define the goal to convince the receiver.
  • After that use the email marketing conversion tracking.
  • Create the testing email campaigns
  • Now its time to the analysis of the result.

Prepare such emails and check which one works and which one not.

If you are confused you can sue various email marketing strategies with RFM to run your campaign and retain your previous customers. Utilize the objective to initiate the concise depiction of the customers. Once you bring these metrics in your system you will able to understand and interpret the customer behavior regarding a purchase in your online store.


Mudassar Hassan brings 8 years of experience in helping grass roots, mid-sized organizations and large institutions strengthen their management and resource generating capacities and effectively plan for the future. He is also a mentor and professional advisor to artists working in all disciplines. He is also the gold medalist from Abbottabad University of Science and Technology in the Bachelors of Sciences of Computer Science and recently Graduated from the University of Bolton with Masters in International Management.