The Power of High Roller Segmentation

In the world of e-commerce, understanding your customers is the key to success. One effective way to do that is by creating a high roller segment, which targets your most valuable customers based on their Recency, Frequency, and Monetization (RFM) behaviors. 

In this blog post, we’ll dive into the process of creating this powerful high roller segment, ensuring that you can boost sales and build stronger customer relationships.

Unveiling the RFM Method for Segmenting High-Value Customers

Before we dive into the nitty-gritty of creating a high roller segment, let’s briefly understand the RFM method:

  • Recency (R): This refers to how recently a customer has made a purchase. For the high roller segment, we’re looking for customers who have bought within the last 60 days.
  • Frequency (F): Frequency measures how often a customer purchases within a given time frame, typically a year.
  • Monetization (M): Monetization deals with the average order value (AOV) of your customers’ purchases.

Now, let’s explore the step-by-step process to identify and target high roller customers effectively.

Step 1: Identifying Recent Purchasers (Recency)

To identify recent purchasers (the “R” in RFM), follow these steps:

  1. Access your e-commerce platform and navigate to “Custom Reports.”
  2. Create a new report from scratch.
  3. Opt for a “Single Metric Deep Dive” report.
  4. Name your report, e.g., “AOV (Average Order Value) for Recent Purchasers.”
  5. Set the metric to “Placed Order.”
  6. Choose “Average Value” under the “Value” option.
  7. Run the report for the last 365 days to cover a wide range of data.
  8. The resulting figure will represent the average order value of your customers.

For example, the average order value might be $58.55.

Step 2: Calculating Customer Frequency

Determining customer frequency (the “F” in RFM) is the next step:

  1. Using the same report created for recency, run the report to calculate the average number of orders placed by your customers over the last year.
  2. For instance, the average number of orders may be 2.43.

Step 3: Determining Average Order Value (Monetization)

In the final step:

  1. Find the average order value (AOV) for all your customers over the last year.
  2. The high roller segment should target customers with an AOV higher than this average.

Crafting the Perfect High Roller Segment

Now that you have the three critical metrics, you can create the high roller segment. Here’s how to do it:

  • Include customers who have made purchases in the last 60 days (Recency).
  • Target customers with a frequency higher than the average (Frequency).
  • Focus on customers with an average order value (AOV) higher than the average (Monetization).

Putting It All Together

  1. Set the criteria for your high roller segment:
  • Recency: Purchases within the last 60 days.
  • Frequency: Above the average, e.g., 2.43.
  • Monetization: AOV greater than the average, e.g., $58.55.
  1. Create your high roller segment using your e-commerce platform’s segmentation tools.
  2. Let the predictive analytics do the work for you, and you’ll have a targeted high roller segment ready to boost your sales.

Conclusion

Understanding your high-value customers and creating a high roller segment is a game-changer for e-commerce success. By following the RFM method and these steps, you can create a segment that focuses your efforts on those customers most likely to drive sales and contribute to your business’s growth. 

So, take action today and watch your sales soar with your new high roller segment.