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80/20 RFM Analysis Overview

WEB - 80_20 Ebook (2) For ecommerce, the 80/20 rule is simple: 80% of your business comes from 20% of your customers. 

Who are these valuable customers? How can you find them? What can you learn about them when you do? That’s where the 80/20 RFM analysis comes in. RFM stands for Recency, Frequency, and Monetary — the three metrics used to determine a customer’s lifetime value. Our 80/20 RFM analysis explores these three metrics in your existing customer base.

 

Want to learn more? Check out our article titled "A Primer for Growing Ecommerce Using the 80/20 Rule & RFM Segmentation" and download The 80/20 & RFM Analysis Playbook.

Questions Your 80/20 RFM Analysis Will Answer

  • Who are your best customers?
  • Who are your most loyal customers?
  • Who are your most promising customers in terms of lifetime value?
  • Which latent customers should you invest in reactivating?
  • Which customers are you at risk of losing?
  • Which lost customers should you stop paying attention to?
  • Which group of customers is most likely to respond to your current campaign?
  • Are you acquiring more top customers over time compared to low-quality customers?
  • How is the quality of your customer acquisition over time?
  • What do your best customers look like in comparison to the rest of your customer base?
  • What is the general health of your customer base?

Reports Included in Your 80/20 RFM Analysis

RFM Analysis

  • Recency - when did a customer last purchase?
  • Frequency - how often do they purchase?
  • Monetary - how much do they spend?

Top Customer Analysis

  • Isolate the top 1%, 5%, 10% and 20% of customers
  • Cross-examine those groups across criteria like order value, days between orders and more
  • Create actionable list segments for HubSpot workflows

Storewide Cohort Analysis

  • Examines the quality, against established benchmarks, of all customers acquired in a specific timeframe
  • Measured in monthly and yearly time increments

Customer Segment Cohort Analysis

  • Examines the quality, against established benchmarks, of customers within their defined segments acquired in a specific timeframe
  • Measured in monthly and yearly time increments

Delivery of your 80/20 RFM ANalysis

Once completed, Unific will send you a file containing:

  • the raw data used in the analysis
  • a spreadsheet with all of tables generated by our analytics team
  • a formatted document detailing the key insights and findings within the various analysis, as well as our strategic recommendations for growth

In addition, you (and your team) will meet with a Unific expert to review all of the deliverables.

 

A "Big 4" consulting firm might charge $25,000 or more for a similar one-time analysis, but because we've worked with so many aspiring brands and have built a scalable process for 80/20 RFM analysis, our project cost starts at $2,500. Ready to get started? Schedule a call with us today.

top-customersCreated with Sketch. R e c e n c y R a t i n g S t a r t D a y s E n d D a y s P e r c e n t o f C u s t om e r s N u m b e r o f C u s t om e r s T o t a l C u s t om e r Li f e t i m e R e v e n u e P e r c e n t o f C L R e v e n u e 5—Stars 30 17.26% 6834 $2,247,383.81 21.29% 4—Stars 31 60 10.19% 4037 $1,217,048.87 11.53% 3—Stars 61 90 9.99% 3956 $969,687.69 9.18% 2—Stars 91 180 21.26% 8417 $2,036,212.02 19.29% 1—Star 181 41.30% 16355 $4,087,696.83 38.72% Recency: 5—star rating based on days since last 100.00% 39,599 $10,558,029.22 100.00% F r e q u e n c y R a t i n g M i n N u m b e r o f O r d e r s M a x N u m b e r o f O r d e r s P e r c e n t o f C u s t om e r s N u m b e r o f C u s t om e r s T o t a l A mo un t o f R e v e n u e P e r c e n t o f R e v e n u e 5—Stars 5 4.55% 1801 $1,611,270.4 1 15.26% 4—Stars 4 4 3.31% 1311 $892,208.5 8 8.45% 3—Stars 3 3 7.10% 2813 $1,389,774.9 5 13.16% 2—Stars 2 2 17.69% 7006 $2,279,864.3 7 21.59% 1—Star 1 1 67.35% 26668 $4,384,910.9 1 41.53% Frequency: 5—star rating based on total # of Orders 100.00% 39,599 $10,558,029.22 100.00% M on e t a r y R a t i n g M i n A mo un t o f O r d e r s M a x A mo un t o f O r d e r s (l e s s t ha n ) P e r c e n t o f C u s t om e r s N u m b e r o f C u s t om e r s T o t a l A mo un t o f R e v e n u e P e r c e n t o f R e v e n u e 5—Stars $2,000 2.32% 917 $4,104,917.5 1 38.88% 4—Stars $1,025 $2,000 2.68% 1061 $1,589,794.0 2 15.06% 3—Stars $475 $1,025 5.94% 2353 $1,696,084.4 3 16.06% 2—Stars $65 $475 39.84% 15778 $ 2,611,545.0 7 24.74% 1—Star $65 49.22% 19490 $ 555,688.1 9 5.26% Monetary: 5—star rating based on total lifetime revenue 100.00% 39,599 $10,558,029.22 100.00%

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