What is 80/20 RFM Analysis?

More than 100 years ago, Italian economist Vilfredo Pareto wrote a paper arguing that 80% of the land in Italy was owned by 20% of its population. This would come be to be known as the Pareto Principle. Over time, this observation would become a staple in applications ranging from math and software to sports and even accident prevention.

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 value — the three metrics used to determine a customer’s worth. Our 80/20 RFM analysis explores these three metrics in your existing customer base.

By examining the length of time since a customer’s last order, the number of orders they’ve made over a certain timeframe, and how much money they’ve spent with you in that period, we can help you can narrow down which buyers you should be focusing your efforts on. Figuring this out can mean the difference between doubling your growth — or watching your revenue fall.
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%
Recency, Frequency, Monetary analysis to tell you who your best customers are so that you can market to the right people at the right time

Who Benefits from an 80/20 RFM Analysis?

At Unific, we believe — and have proven — that 80/20 RFM analysis isn’t limited to major eCommerce companies only. It’s a solution for eCommerce businesses of all sizes and industries, from companies with annual revenue below $100,000 to those with revenue well into the millions and tens of millions. Every business that has customers has data, and that means there are opportunities to use that data to make more informed decisions and leverage powerful tools to take action. 

Whether you’re a large retailer with an extensive customer base and market niche, or a new face in the your particular industry, it’s important that you understand where your most valuable customers are. An 80/20 RFM analysis from Unific can help your business do just that.

Point Your eCommerce Marketing Efforts in the Right Direction

Thanks to our extensive integration options, Unific can help you access the data that can make the greatest impact for an eCommerce company. Through our 80/20 RFM analysis, we can help you turn your data into powerful insights that become actionable through our deep integrations and growth tools — all so you can more effectively reach the customers that already trust and rely on you for your products.

Our 80/20 RFM analysis is available to you at any time, but why wait? The right time is now — when you have the chance to get an in-depth understanding of the customers that are behind the growth of your business. The sooner you understand who your best customers are, the sooner you can start putting your eCommerce and marketing automation platforms to work serving them.

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