In customer relationship management, there are many ways to segment customers. Enterprises can segment customers according to different factors based on different needs, such as customer personalized information, customer consumption behavior (consumption habits, quantity and frequency), customer purchase method, customer geographical location, customer occupation, customer relationship network, customer knowledge level, customer size, customer contribution to the enterprise, customer value (especially customer life cycle value), etc.
According to the characteristics of cross-border e-commerce customer management, the more commonly used method for customer segmentation is the RFM customer segmentation model. The so-called RFM, namely Recency, Frequency, Monetary, is a classification management of the number and amount of customer purchases based on the customer’s recent consumption. It is an important tool and means to measure customer value and customer profit potential. Enterprises use the RFM customer segmentation model to determine which customers are the best in terms of quantity by checking how long the customer’s last consumption was, the number of times the customer consumed in the recent period of time, and the amount of the customer’s consumption in the recent period of time, and determine which customers are the best in terms of quantity, infer the abnormal situation of customer consumption, analyze whether customers are lost, which customers need the company’s continuous attention, and which customers need to be eliminated, etc.
Among them, R (Recency), the number of days since the last consumption, refers to how long it was since the customer’s last consumption. The closer the customer’s last consumption time is, the greater the profit-making potential he has. Most companies use days, but for some companies, it may be more appropriate to use months, weeks or even hours as the unit of measurement.
F (Frequency), consumption frequency, refers to the number of times a customer has consumed in the recent period of time. Customers who frequently purchase recently are usually customers with high satisfaction or high loyalty. Increasing the number of customer purchases means winning more market share from competitors. Therefore, customers with higher purchase frequency are more beneficial to store development.
M (Monetary), consumption amount, refers to the amount of money a customer has spent in the recent period of time. Data show that 40% of customers contribute more than 80% of the company’s turnover, and the average consumption of the best 10% of customers is usually ten times that of the worst 10% of customers.
The RFM customer segmentation model dynamically displays the entire profile of a customer, providing a basis for personalized communication and service. Cross-border e-commerce customer service staff can segment customers and carry out related work based on the time, frequency and amount of their consumption.