Priority Potential RFM

After learning what is the RFM algorithm in my previous post. I would like to write today about my adjustments and improvements that helped me during these years as an online marketer.

I call it the Priority Potential RFM or just PPRFM.

P - Priority (who to contact first)
P - Potential (predicting lifetime value of a customer)
R – Recency (most recent deposit)
F – Frequency (how many times he deposited)
M – Monetary (Lifetime Deposits)

Please see attached diagram I did for an online gaming company:

Remember we are not changing the RFM algorithm we are just adding two new add-ons.

Priority - everything should work according to who do you want to contact first and why.

Potential - In this section you put everything you think might influence a customer to buy your product or not. It can be various things so try to think what are the characteristics that differentiate your purchasing customers from your customers that still didn't buy from you and segment them according to that.

For example your database shows that Americans ages 45 - 62 have high life expectancy and high CLV. So when a new customer from Arizona, USA, age 61 signs up with you. He will have higher potential than a customer from Arizona, USA age 24.

Remember that every customer has the potential to spread your story to other potential candidates, so treat them with respect and segment them correctly.

Comments

The innovators and the early adopters, can you spot them?

Before I start this post. I would like to thank TED talks for helping me enrich my world of marketing and more. One of the best talks I ever heard was made by Simon Sinek and was about how great leaders inspire action. In this post I would like to emphasis the change in my approach towards contacting customers and in which way to do it. Simon presented the following diagram: We need to talk to our customers from the inside to the outside. Conveying why we do things, how we do it and at last the what we do. As Simon said, people follow the why you do it and not the what you do. Then he spoke about the innovators and the late adapters using the following diagram: Where he brakes down your customers into groups, where the innovators pass your story along with the early adopters. The 80/20 rule also can be adjusted according to this diagram: 1. The Innovators - 2.5% - your top VIPs 2. Early Adopters - 13.5% - 2nd level VIPs 3....

Meeting summary, how to make sure everything is working according to plan!

When it comes to meetings the most important thing in my opinion is how we implement what was decided. In order to do this right, we need to be organize and assign people with tasks but most important is to assign head of implementation - the person that makes sure everything is going according to plan (i.e Execution Manager or just EM). Every meeting that requires a follow up needs an EM. So what do we need in this Meeting Summary Template: 1. Project Name/Meeting Title 2. Date 3. Time 4. Attendees 5. Non-Attending Invites 6. Agenda Items (what we spoke about in the meeting) 7. Decisions Made 8. Issues Identified 9. Follow-up Action Items 10. Most important: EM You can download the template here

Customer Life Cycle

Simple and easy way to understand your customer's road map (also known as customer's life cycle) As you can see I separated the customer's life cycle to 4 stages. 1. when he gets to your site 2. when he signs up 3. when he makes his first purchases (retention only starts after four* purchases) 4. retention stages * you can define different quantities and also change it to days/months of activity. I just think you need to understand that most customers will purchase only once - twice with you. So you need to treat them differently and show them the way to become loyal high value customers!

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