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Written by

Joel Hauer

Principal Consultant

RFM analysis helps Shopify store owners understand their customers better by scoring them based on Recency, Frequency, and Monetary value. These scores create customer segments like Champions, Loyal Customers, and At Risk, enabling you to tailor marketing strategies and boost sales.

Key Benefits of RFM Analysis for Shopify:

Shopify

  • Targeted Marketing: Focus on high-value customers with personalized offers.

  • Customer Retention: Identify and re-engage at-risk customers.

  • Increased Revenue: Optimize campaigns for top-performing segments.

How It Works:

  1. Shopify assigns RFM scores (1-5) based on customer purchase behavior.

  2. Customers are grouped into segments like Champions or Dormant.

  3. Use these insights to design campaigns like VIP programs, win-back offers, or loyalty rewards.

RFM analysis is a straightforward way to grow your eCommerce business by focusing on the right customers. Let’s explore how to set it up and use it effectively.

Using RFM Segmentation in eCommerce | Marketers ...

RFM Customer Segments in Shopify

With your RFM scores ready (refer to 'RFM Analysis Basics'), Shopify automatically organizes your customers into specific groups.

Breaking Down RFM Metrics

RFM analysis uses three key factors: how recently a customer purchased, how often they buy, and how much they spend. These metrics help create actionable customer segments. For example, a customer who made a purchase last week (R = 5), shops monthly (F = 4), and spends a moderate amount (M = 3) might score an overall 4. Shopify takes these scores and sorts customers accordingly - let's see how it works.

How Shopify Handles RFM

Shopify’s analytics assign each customer a score from 1 to 5 for recency, frequency, and monetary value. These scores are updated in real time, allowing Shopify to automatically group customers into segments. You can view these insights directly on your dashboard, making it easier to align marketing efforts with customer behavior.

Types of Customer Groups

  • Champions (High R, F, M): Perfect candidates for exclusive previews or VIP events.

  • Loyal Customers (High F, M): Offer loyalty programs or subscription plans to keep them engaged.

  • New Customers (High R, low F/M): Focus on welcome emails and onboarding content to build relationships.

  • At Risk (Low R, previously high F/M): Use personalized win-back offers to re-engage these customers.

  • Dormant (Low R, F, M): Try re-engagement campaigns or consider removing them from your lists.

These segments help you tailor your marketing strategies to meet the needs of different customer types.

How to Run RFM Analysis in Shopify

Here’s how you can perform RFM analysis within Shopify to better understand your customer base.

Getting Your Data

  1. Go to Orders in your Shopify admin. Use filters like date range or customer group to narrow down the data you need.

  2. Click Export and choose to export up to 50 orders or request a full CSV file via email.

  3. Make sure your export includes the following details:

    • Order date

    • Customer email (and phone number, if possible)

    • Total spent

    • Transaction history or purchased items

Once you’ve exported the data, you’ll need to calculate R, F, and M scores.

Setting RFM Scores

Shopify automatically assigns each customer a score for Recency (R), Frequency (F), and Monetary value (M) on a scale of 1 to 5 (1 being the lowest, 5 being the highest). These scores help classify customers into groups like Champions, Loyal, and Dormant.

Creating Customer Groups

To create custom customer groups for targeted campaigns, go to Customers in your Shopify admin. Select Create segment and set criteria based on R, F, and M scores to define your segments. This allows for more personalized marketing efforts.

Using RFM Data to Increase Sales

Once you’ve set up your RFM segments, you can use them to implement specific strategies aimed at increasing both sales and customer loyalty.

VIP Customer Programs

Give your Champions something special, like early access to product launches or exclusive invites to VIP-only events. These perks make them feel valued and keep them coming back.

Win-Back Campaigns

Reconnect with lapsed but high-value customers using targeted approaches, such as:

  • Discounts on their favorite product categories, available for a limited time.

  • Personalized messages showcasing new arrivals that match their preferences.

  • Feedback requests to understand why they stopped purchasing.

For example, merchants using Yotpo's SMSBump feature report conversion rates of 11% or more on win-back messages. It’s also worth noting that keeping an existing customer is far less expensive - up to five times cheaper - than acquiring a new one.

RFM-Based Marketing

Tailor your marketing efforts to align with specific RFM segments like Champions, Big Spenders, and Loyal Customers. Here’s how:

  • Champions: Reward them with VIP previews or exclusive early-bird offers.

  • Big Spenders: Highlight premium products and use messaging that emphasizes luxury.

  • Loyal Customers: Introduce subscription plans to encourage more frequent purchases.

Keep a close eye on metrics like open rates, conversions, and repeat purchases. Use this data to tweak and improve your campaigns over time.

RFM Analysis Tools for Shopify

Using the right tools for RFM analysis helps fine-tune customer segmentation and run targeted campaigns that drive retention and revenue.

Once you've created your RFM segments, Shopify's built-in tools and third-party apps can help automate insights and campaigns. Compare Shopify's native features with specialized apps to find the best match for your needs.

Built-in Shopify Tools

Shopify assigns customers a score from 1 to 5 based on recency, frequency, and monetary value. You can track each segment's activity - like days since their last purchase, total orders, and total spend - right from your dashboard.

Add-on Apps

Here are some apps worth considering for advanced RFM analysis:

Segments Analytics by Tresl

  • Subscription: $199/month

  • Offers AI-driven segmentation

  • Integrates with platforms like Klaviyo, Meta, Google, TikTok, and Postscript

  • Rated 5.0/5.0 from 68 reviews

Peel: Retention Analytics

  • Subscription: $199/month

  • Specializes in retention, cohort, and product analytics

  • Works seamlessly with Skio and other subscription tools

  • Rated 5.0/5.0 from 37 reviews

Tips for RFM Analysis

  • Start with Shopify's built-in analytics to create baseline segments.

  • Test free trials of apps that align with your marketing tools (e.g., Klaviyo, Google Analytics).

  • Regularly review RFM metrics to spot trends and adjust strategies.

  • Use automation to keep segments updated as new data becomes available.

For example, Canopy reported a 10× improvement in daily reporting after using Peel with Skio integration.

Next Steps with RFM Analysis

To build on the RFM tools mentioned earlier, here’s how you can maintain and grow your customer segmentation efforts effectively.

Leverage Shopify's built-in 1-5 RFM scoring system to group customers and design targeted campaigns.

"RFM analysis provides valuable customer insights, enabling businesses to make informed marketing decisions by analyzing customer cohorts, visualizing RFM data, and leveraging customer behavior information."

Keep a close eye on each segment's purchase frequency, spending habits, and lifetime value. Use this data to fine-tune your offers and adjust budget allocations where needed.

Automate the process of tracking purchase frequency, total spend, and lifetime value. This ensures your segments stay current and can help you create lookalike audiences for broader reach.

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