Harness the Power of Repeat Purchases 

Using RFM Analysis to Segment Customers and Evolve Your Business

Business demands constant evolution. But it’s not about suddenly taming fire – it’s about clear and measured paces. And it’s not just about the new and the ‘sexy’ – it’s even more about the consistent and reliable elements, like your important repeat customers. To evolve along these lines, a business today needs focused data-driven marketing. It needs to know the patterns. (If the lady who comes to your grocery regularly suddenly didn’t this week, it probably means she went somewhere else. If the guy who takes out dinner from your place every other night hasn’t been around, he may need a reminder of his go-to burger.) And for all this, it needs RFM Analysis – a proven method for customer segmentation that has been used for decades to improve retention and loyalty. More than any other form of adaptation, RFM Analysis is critical to your business evolution.

Classifying the Pool – What is RFM Analysis?

RFM Analysis works to identify the most valuable customers in your database. It divides them according to:


  • Recency How recently did the customer make a purchase at your store? 
  • Frequency How often does the customer make purchases with you? 
  • Monetary Value How much does the customer spend? 


Each element on its own is a good indicator of the customer. (Recency indicates, are you currently on their radar? Have they been absent too long? Frequency demonstrates, are they a newcomer? A frequent flyer? Do their purchases line up with specific events, holidays, or campaigns? Monetary value looks at if have they spent a lot on your business? Do they have significant spending potential?)


Yet when these three core elements are combined, the big-picture value is far more important than any single factor. It allows you to segment your customer base, strategize, and find the ones that are most profitable. 

Survival of the Fittest – Why RFM Analysis? 


Your RFM Analysis can help you to pull back the layers and reveal more about what is happening beneath the surface of daily business-as-usual. For you, the power of this analysis lies in the cohorts – wherein your data is broken into important groupings of shared characteristics that will point out who are the VIPs that you can’t lose, who is at risk, who has been out of the picture lately, etc. Then you can know how and where to best focus your efforts. 


  • It will allow you to identify your most valuable customers – who comes in the most and who is spending the most money while there. And with a platform like Weezmo, once you know how recently and frequently a customer has visited, if they have skipped their weekly visit, they can be addressed with the exact right message.
  • It will give you an opportunity to improve customer loyalty by tapping into the patterns of business that are being shaped, and responding to the needs they demonstrate.
  • Ultimately, it will point you along the exact path for increasing revenue.
  • Also, it’s far superior to third-party data collected from the outside, which will not be as meaningful. First-party data that you have collected yourself is much more pointed, relevant, and useful to your business.

Charting the Evolutionary Tree An RFM Analysis How-To Guide

What you need for RFM Analysis:

  • Customer name or ID 
  • Recency: Last purchase date 
  • Frequency: The number of purchases over, for example, one year 
  • Monetary Value: Total spend over that same time frame


Where you get it:

If you do not have easy access to this information, you may need to talk to your tech team, or input the data yourself into an Excel sheet. Of course, e-commerce data is relatively easy to collect, but in-store purchases are more complicated. A solution like Weezmo organizes the data from your POS and enables you to create RFM-based audiences, connecting the online and offline data.


Calculating RFM: 

Score: Give each customer a score between 1 through 5 for each of the three categories. For example, give the top chunk in each category a score of 5, the next group down a score of 4, and so on.

Analyze: Customers whose combined points score the highest are your target market. 

Natural Selection – The RFM Analysis Takeaway and Improving Customer Relations


The customers who appear at the top of this list are your best customers – those who have bought from you multiple times, regularly, and recently.  

At the bottom, you have customers who may have spent a lot of money, but they haven’t been back often and haven’t bought anything recently.  

(By the way, this helps illustrate how the customers who make the biggest purchases aren’t always the most profitable. You are more likely to make greater profit from those who may spend smaller amounts but buy often.)


Now, in order to use the results meaningfully, split them into groups, for example, the customers that you ‘cannot lose’ and ‘loyal customers’ or ‘champions.’  Focus on them and invest in their satisfaction. 


Those who can be considered ‘at risk’ or ‘hibernating’ are in another category and you should address their needs in tailored ways, too, so those customers can be salvaged and boosted. How? 


  1. Read up on customer retention to learn how to improve. 
  2. Measure them using your own POS. Or with a solution like Weezmo you can measure and also identify 100% of your customers online and offline, analyze their performance both in-store and online, build campaigns to target them, and optimize and drive more revenue. 
  3. Finally, track user satisfaction through support, surveys, and digital receipts.


Climbing the Food Chain RFM and Beyond


Overall, RFM analysis is a significant tool that can help businesses to better understand their customer base and develop more effective marketing strategies. By using it, businesses can evolve, sharpen, identify their most valuable customers, and develop targeted campaigns that are more likely to result in increased sales and customer loyalty. 


But what if you could propel your business strategic capabilities even further – essentially, develop thumbs, wings, and bigger brains in one fell swoop? What if you could take RFM analysis to the next level by combining online and offline data to gain an even deeper understanding of your customers? Because while RFM exists for online businesses and they have all the data to leverage, that has not been the case for offline businesses or those that are a combination. Until now.


Weezmo is the powerful platform that allows businesses to connect their online and offline data, giving them a more complete picture of their customers’ behavior and preferences. By combining RFM analysis with Weezmo’s data integration capabilities, businesses can identify their most valuable customers across all channels and develop more effective marketing campaigns to optimally evolve and dominate within their space. 

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