RFM customer analysis
The recency, frequency, and monetary value (RFM) analysis lets you deep-dive into customer behavior so you can focus on building retention, loyalty, and customer relationships with existing customers based on their existing shopping habits.
RFM analysis applies a 3-digit score to each customer, where each digit ranges from 1 to 5, and relates to the days from a customer's most recent purchase (recency), the total number of orders (frequency), and the total amount spent (monetary value), in order. RFM analysis then categorizes all customers into 11 RFM groups based on their scores, which you can use to plan effective sales goals, marketing strategies, and loyalty programs.
RFM scores are based only on data from your store, and not on industry standards or third-party data. For example, a score of 5 indicates that the customer is in the top 20% of the dimension for your store, and a score of 1 indicates that the customer is in the bottom 20% of the dimension for your store. Specific RFM scores for individual customers aren't displayed anywhere in your Shopify admin, as the most valuable insight is the customer's overall RFM group.
For each RFM group, the report's data table lists the following metrics by default:
- Percentage of your total customers
- New customer records
- Average days since last order
- Total number of orders
- Total amount spent
Note
You might observe a discrepancy between the total number of customers and the number of customers with an assigned RFM group. This is due to a brief delay in when new customer data is synced from the store.
RFM groups
RFM groups are 11 predefined customer categories based on order recency, frequency, and monetary value criteria. A customer's RFM group is determined based on a customer's recency score (R) and the average between their frequency score and their monetary value score using the formula (F + M)/2. The end result is represented as FM.
For example, a customer used to place higher-value orders quite often, but hasn't made a purchase in a long time. This means they might have an RFM score of 154, which indicates that they have a low recency score (1), but a decently high frequency (5) and monetary value (4) score. Their R value is 1, and their FM value would be 4.5, using the formula (5 + 4)/2. Overall, based on how the groups are calculated, these values would categorize this customer as Previously loyal.
Refer to the following table for definitions for each RFM group, as well as the general goal when engaging with that group.
| RFM group and description | Recency (R) | Average of Frequency and Monetary value (FM) | RFM goal and examples of ways to engage |
|---|---|---|---|
| Prospects Customers with no orders yet. | - | - | Move customers to New:
|
| Dormant Customers without recent purchases, with infrequent orders, and with low spend. | R ≤ 2 | FM ≤ 2 | Move customers to Almost lost:
|
| At risk Customers without recent purchases, but with a strong history of orders and spend. | R ≤ 2 | 2 < FM ≤ 4 | Move customers to Loyal or Needs attention:
|
| Previously loyal Customers without recent purchases, but with a very strong history of orders and spend. | R ≤ 2 | 4 < FM | Move customers to Loyal:
|
| Needs attention Customers with recent purchases, but some orders, and moderate spend. | R = 3 | FM = 3 | Move customers to Loyal or Active:
|
| Almost lost Customers without recent purchases, fewer orders, and lower spend. | R = 3 | FM ≤ 2 | Move customers to Active or Promising:
|
| Loyal Customers with recent purchases, many orders, and the most spend. | 3 ≤ R ≤ 4 | 3 < FM | Move customers to Champions:
|
| Promising Customers with recent purchases, fewer orders, and low spend. | R = 4 | FM ≤ 1 | Move customers to Active:
|
| Active Customers with recent purchases, some orders, and moderate spend. | 4 ≤ R | 1 < FM ≤ 3 | Move customers to Loyal or Champions:
|
| New Customers with very recent purchases, few orders, and low spend. | R = 5 | FM ≤ 1 | Move customers to Active:
|
| Champions Customers with very recent purchases, many orders, and the most spend. | R = 5 | 3 < FM | Retain as brand advocates:
|
RFM group customer segmentation
You can click an RFM group name in the report's data table to do any of the following actions:
- View report: Redirects you to the RFM customer list and automatically applies the selected RFM group as the filter.
- Preview segment: Redirects you to the segment editor and automatically applies a customer segment based on the selected RFM group and any additional filters you've applied to the report.
You can also manually apply the rfm_group attribute as a filter when building segments. Learn more about customer segmentation.
RFM customer list
The recency, frequency, and monetary value (RFM) customer list is a complete list of customers who aren't in the Prospects RFM group, and is displayed with the following data columns:
- Average days since last order
- Total number of orders
- Total amount spent
Learn more about how RFM groups are calculated and categorized from the RFM customer analysis report.
You can apply additional dimensions and filters to customize a new exploration. Click Preview segment to navigate to the segment editor and automatically apply a customer segment based on the selected RFM groups and any additional filters you've applied to the report.
Tip
Despite RFM scores for individual customers not being accessible in your Shopify admin, you can filter the RFM customer list or a customer segment down by adding extra filters that represent specific differences in RFM score.
For example, customers with RFM scores of 525, 534, 544, or 555 would all be considered Champions and are all valuable customers to retain despite the difference in their scores. However, if you wanted to identify your highest-spending champions (that is, those who scored highest in monetary value) to offer them exclusive perks as 'brand ambassadors', you could review the average customer spend for the Champions group as a whole using the RFM customer analysis report, and then filter your customer list to display only champions (rfm_group = 'CHAMPIONS') with a Customer amount spent of 50% higher than that average value. This lists customers with higher monetary value scores of 4 or 5, without needing to identify specific or complete RFM scores for individuals.
Customize the Customers reports
You can use the filtering and editing features to customize the reports about your customers.
Example customization: Target an email campaign towards returning customers
If you want to use an email campaign to encourage returning customers to make another purchase, then you could customize your Returning customers report so that it displays only the returning customers who agreed to accept marketing.
Steps:
From your Shopify admin, go to Analytics > Reports.
Click Categories.
Click Customers to filter the reports to display only customers reports.
Click Returning customers.
From the Returning customers report's configuration panel, click ⊕ in the Filters menu.
Select Customer subscription email status.
In the new filter, click Select value, and then click Subscribed.
Click Apply.
The report is now limited to returning customers who accept marketing.
You can then export the report to a CSV file, and you can use all the email addresses in the file for your email campaign.
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