The purpose of recency, frequency and value (RFV) reporting is to group people together in terms of how much they spend and how often they do it. For example, if you were to look at your customers over the 12 months of the year, you might find that most of them were spending about the same amount of money, and shopping about as often in December as they were in January.
However, some people would be 'improving' in that they are spending more and more often but others would be 'lapsing' in terms of either money or frequency.
Using RFV you can identify these 'lapsing' customers and send them a campaign to try and get them back shopping with us before they go away completely.
Note: RFV metrics need to be configured by your administrator. If you cannot view RFV data, contact your administrator to verify your settings.
RFV segments
The total recency, frequency and value bandings cells (which is calculated by the total number of permutations - 27 if the default 3 at each level is used) will be calculated into the final segments. Given the high number of permutations of cells, the product will have to reduce these down to the following:
| Cell | Recency | Freq | Value | Segment |
|---|---|---|---|---|
| 1 | High | High | High | Devotees |
| 2 | High | High | Medium | Loyal |
| 3 | High | High | Low | Loyal |
| 4 | High | Medium | High | Develop and Grow |
| 5 | High | Medium | Medium | Develop and Grow |
| 6 | High | Medium | Low | Develop and Grow |
| 7 | High | Low | High | Develop and Grow |
| 8 | High | Low | Medium | Welcome |
| 9 | High | Low | Low | Welcome |
| 10 | Medium | High | High | Loyal |
| 11 | Medium | High | Medium | Develop and Grow |
| 12 | Medium | High | Low | Develop and Grow |
| 13 | Medium | Medium | High | Develop and Grow |
| 14 | Medium | Medium | Medium | Develop and Grow |
| 15 | Medium | Medium | Low | No Action |
| 16 | Medium | Low | High | Develop and Grow |
| 17 | Medium | Low | Medium | Reactivate |
| 18 | Medium | Low | Low | No Action |
| 19 | Low | High | High | Reactivate |
| 20 | Low | High | Medium | Reactivate |
| 21 | Low | High | Low | No Action |
| 22 | Low | Medium | High | Reactivate |
| 23 | Low | Medium | Medium | Reactivate |
| 24 | Low | Medium | Low | No Action |
| 25 | Low | Low | High | Reactivate |
| 26 | Low | Low | Medium | Reactivate |
| 27 | Low | Low | Low | No Action |
The cells can rationalise down to the following segments using the following formulas. These should be taken in the given priority order:
|
Recency, Frequency, Value |
Segment |
Cell [27 Total Example] |
|---|---|---|
| All High Band | Devotees | 1 |
| High Recency and Frequency, Medium Recency and High Frequency and Value | Loyal | 2,3,10 |
| High Recency and Medium Frequency, High Value, Medium Recency and High Frequency or All Medium | Develop & Grow | 4,5,6,11,12,13,14,16 |
| High Recency Band | Welcome | 8,9 |
| Low Value Band | No Action | 15, 18, 21, 24, 27 |
| Remaining | Reactivate | 17,19,20,22,23,25,26 |
Using RFV data to engage an audience (worked example)
In the below example, customers are divided into 8 groups depending on their spend value and frequency. The vertical list shows where people were in the previous month and the horizontal shows where they are now.
You can see that in June there are 6719 people who have moved from the grow to the reactivate group. These people may be in danger of lapsing.
This data is summarized in the bubble chart. To use this information for a campaign:
-
Right click on the reactivate bubble.
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Select new campaign audience.
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Create a campaign using the customers flagged for reactivation (pre-selected as the audience when right clicking their bubble).