How To Target The Most Likely Buyers From Your House File

What in the world is the RFM System??

Lucky for you, I’m going to tell you…

The RFM System stands for:

R – Recency
F – Frequency
M – Monetary

It’s a system used by businesses to gage which of their customers is mostly likely to buy again, so they can direct their marketing to these buyers.

Recency:  This tells you how recent your clients have bought from you.  The more recent that a client buyers from you the more likely they are to buy from you again. 

Frequency:  This tells you how often a client has bought from you.  The more frequently a client has bought from you the more likely this client will buy from you again and again.

Monetary:  This tells you how much money your clients have spent on you.  The more they spend on you the more likely they are to keep spending on you.

What you need is a number system to gage your clients on how recently, how frequently, and how much they spent. 

You can use the numbers 1 through 10 to rank your clients on a chart.  1 being the mostly likely to buy again and being your best customers, and 10 being the clients least likely to buy.

What you do now is give points to each of the three categories. 

For Recency, you want to rank your clients, 1 through 5, by how recent they bought from you.  The clients who most recently bought from you receives a score of 5, and the clients who did not buy from you for a long time would receive a score of 1.

For Frequency, you want to rank your clients, 1 through 5, by how frequently they bought from you.  If the client bought 5 or more products they would receive a score of 5.  4 products they would get a score of 4, and so on.  If they bought 1 product from you they would receive or score of 1.

For Monetary, you want to rank your clients, 1 through 5, by how much they spent on you.  Again, 5 being the high spenders and 1 being the clients who spent nearly zero.

Then, once you have all of your clients scores added up, add them to your chart.  The highest scored clients go to rank 1 and the clients who scored the least go to rank 10.  Clients who rank 1, 2, or 3 are more likely to buy from you than clients who are ranked 8, 9, 10.

Thanks to this month’s No B.S. Marketing Letter for the “Big Lesson!”

Now go take action!



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