Understanding RFM Segments to Improve Retention

Yotpo’s RFM Segmentation feature helps you categorize customers based on their purchasing behavior, so you can personalize your engagement and drive repeat purchases.

With RFM Segments, you can:

• Analyze customer behavior using Recency, Frequency, and Monetary (RFM) metrics.

• Identify high-value and at-risk customers with clear segmentation.

• Take action by targeting specific customer groups with tailored engagement strategies.

In this article, you’ll learn how to use RFM Segments to improve retention and customer lifetime value.

What Are RFM Segments?

The RFM Segments page categorizes customers into eight key segments, helping you analyze customer behavior and identify retention opportunities.

Full List of RFM Segments

📌 Act Now – Customers Who Need Immediate Attention

1. Need Attention – Previously high-value and frequent customers who haven’t purchased recently.

   • Why It Matters: These shoppers were once engaged but have stopped buying. A targeted re-engagement strategy can bring them back.

2. Sleeping High Spenders – Customers who previously spent a lot but haven’t purchased recently or frequently.

   • Why It Matters: They have high spending potential, but they need an incentive to return.

3. Regulars: Low Spenders – Customers who purchase regularly and consistently, but at a low value.

   • Why It Matters: They are engaged but spend less per order. Encouraging larger purchases can increase revenue.

🚀 Maintain – High-Value Customers to Retain

4. Top Customers – The best customers who buy frequently, recently, and spend the most.

   • Why It Matters: These customers drive the most revenue and should be nurtured to maintain loyalty.

5. Regulars: High Spenders – Customers who purchase regularly and consistently, with high spending.

   • Why It Matters: Keeping them engaged secures steady high-value revenue.

6. New High Spenders – New customers who made high-value purchases.

   • Why It Matters: They show strong spending potential—converting them into loyal customers can be highly profitable.

⬇️ Lower Priority – Less Valuable or Inactive Customers

7. New Low Spenders – New customers who made low-value purchases.

   • Why It Matters: Encouraging them to return and spend more can help increase their lifetime value.

8. Inactive Customers – Infrequent customers who have made the least purchases and spent the least in the last year.

   • Why It Matters: They are least engaged, making them low priority for retention efforts.

Each segment includes:

• Average Recency – Days since the last purchase (R).

• Average Frequency – Orders per customer (F).

• Average Monetary Value – Average spending per customer (M).

• Sales Share – Segment sales as a percentage of total store sales.

• Yotpo Product Engagement – Sub-segment metrics that show the percentage of customers in each RFM segment who are engaged with Yotpo Loyalty, SMS, Email, and Reviews. These insights help you understand how different RFM groups interact with Yotpo products and where engagement opportunities exist.

⏳ Timeframe:

• Data is based on the last 365 days (this timeframe cannot be customized).

• The dashboard refreshes daily to reflect the most recent insights.

You can take action on RFM data in two ways:

1️⃣ Actions from the RFM Page

• View Opportunity → If an opportunity is available for the segment, a banner will appear with insights and a suggested campaign.

  • Clicking the banner opens a modal with the opportunity’s details.

• From the modal, clicking "Get Started" redirects you to SMS & Email, where you can create a targeted campaign.

• Create Campaign → If no opportunity is available, this option appears instead. Clicking it redirects to SMS & Email, allowing you to build a custom campaign.

  

• Export → Downloads segment data as a CSV file for further analysis.

2️⃣ Actions from the SMS & Email Product

• Create campaigns using RFM segments to send personalized messages.

• Create flows using RFM segments to automate customer engagement.

• Use RFM segments in the Segmentation Builder to combine them with other customer groups.

Start leveraging RFM Segments today and turn data into growth! 🚀